How to Get a Gas Card

For the average U.S. resident, gas isn't a luxury -- it's a necessity. But even in a good year, that necessary expense can be a big pain in the bank account. With the right credit card, however, you can take a little of the sting out of filling the tank. A good gas rewards credit card can help you earn 3% or more back on every trip to the gas station. Here are a few tips to show you how to get a gas card that fits your needs.

How to choose a credit card for gas rewards

With online applications and instant decisions, applying for a credit card is easier than ever. So easy, in fact, that the hardest part of getting a gas card isn't applying -- it's deciding.

There are so many different kinds of gas cards out there that you can't simply choose the one with the biggest rewards rate and call it a day. When gas makes up such a big part of our budgets, it's worth taking the time to really explore and understand your options.

LEARN MORE: The best gas rewards cards

Bank credit cards vs. cobranded gas station cards

When looking for a gas card, the first instinct may be to get one from, well, the gas station. Most major brands have their own gas cards. You should think twice, however. These cards are often less competitive than you think.

Cobranded gas cards have two main problems:

• They're usually closed loop. This means you can only use them at specific gas stations -- and that's it. Essentially, they're like store credit cards for gas.
• The rewards rates are often very low. They tend to offer discounts on each gallon, which can range from low to downright insulting when prices increase.

In most cases, it's best to stick with regular credit cards that offer bonus rewards on gas station purchases. Not only can they be used anywhere their card network is accepted, but they tend to earn much better rewards.

Doing the math on annual fees

Annual fees can be a pain, but they can also be worth paying under the right circumstances. The key is to figure out which is true in your circumstances.

RELATED: Is Your Credit Card Annual Fee Worth It?

For example, say you spend $2,000 a year on gas. You're trying to choose between two cards, Card A and Card B. Card A earns 5% back on gas and has a $100 annual fee. Card B only earns 3% on gas, but it has no annual fee.

With Card A, you'll earn $100 a year in rewards. But once you subtract the annual fee, your net gain is $0. With Card B, you only earn $60 in rewards. However, with no annual fee, those rewards are all profit, giving you a net gain of $60. In this case, Card B would be the most valuable choice.

Figuring out the value of your rewards

When comparing your gas card options, watch out for apples-to-oranges comparisons. Cash back cards are easy to compare, since they all earn the same currency. But points cards can be trickier.

LEARN MORE: How Do Cash Back Credit Cards Work?

A card that earns 3x points per dollar is only the same as a 3% cash back card if those points can be redeemed for $0.01 each. Check the redemption options to get an idea of what points are worth so you can see the real value of what you're getting.

LEARN MORE: How Do Credit Card Points Work?

Watch out for rewards caps

One big thing to keep in mind with some gas rewards cards is a limit on how many bonus rewards you can earn. This is particularly common on high-earning cards and cards with rotating categories.

Rewards caps can be monthly, quarterly, or even yearly. For instance, you may be limited to earning a 5% rate on the first $500 in bonus category purchases each month. In that case, once you've spent $500 on gas, you'll earn just 1% back on the rest of your gas purchases until the next month.

If you find yourself reaching your cap frequently, it may be a good idea to get a second gas card. Use your highest-earning card until you reach the cap, then switch to your backup until the cap resets.

Pair gas rewards with other useful categories

The best gas rewards cards aren't just for gas. Most also have other useful bonus rewards categories that can make it easier to choose a card. For example, if your two biggest expenses are gas and groceries, you can pick a card that offers bonus rewards for both types of purchases.

RELATED: Best Gas and Groceries Credit Cards

You can also do the same thing with your business credit cards. A few small business cards offer bonus rewards on gas, as well as other valuable business categories.

RELATED: Best Business Credit Cards

Can you get a gas card with no credit or bad credit?

If you're working on building -- or rebuilding -- your credit, then you may not qualify for many of the best gas cards. But that doesn't mean you're out of luck. There are a few options for earning gas rewards while improving your credit score.

Getting a gas card with bad credit

You have two main options for earning gas rewards if you have bad credit. The first is a gas station credit card. As noted above, these cards don't typically have the most competitive rates. But a closed-loop gas card (one that you can only use at certain gas stations) can be much easier to get than a regular credit card.

The other option is a secured credit card. With secured cards, you make a fully refundable cash deposit to secure the account. This determines your credit limit. Then, you use the card like normal. If you pay in full and on time every month, you can build credit. Many secured card issuers will eventually upgrade you to an unsecured card.

RELATED: Best Secured Credit Cards

Many secured cards have no annual fee. Plus, you can find a few secured cards that offer purchase rewards, including bonus rewards for gas.

Are there gas cards for students?

Yes, you can find some really solid gas rewards cards for students. In fact, many major issuers have student versions of their most popular rewards cards. This includes options for up to 3% cash back on gas station purchases.

RELATED: Best Credit Cards for Students

Watch out for high utilization

While you can get a gas card with nearly any type of credit, you need to watch your card balances. Secured credit cards and student cards can have very low credit limits. With gas prices high, you could end up using half your credit limit in a single fill-up.

When you use a big portion of your available credit, your credit score can take a hit. That's because of your utilization rate. Your credit card utilization rate is how much of your available credit you're using. For instance, if your card has a $500 credit limit and you have a $100 balance, your credit utilization is: $100 / $500 = 0.2 = 20%.

In general, it's best to keep your utilization rate below 10%. Once you get over 30%, your credit score may start to suffer. And if you max out your card, you'll see a major score drop. On the plus side, it's only temporary. Once you pay off your card and lower your balance, your score should go back to normal.