Do Fuel Cards Save You Money? Setting The Record Straight

A person stands with a gas pump and a credit card.

Managing fuel costs can be a constant headache for business owners. Not only is fuel expensive, but tracking fuel expenses, minimizing costs, and keeping employees accountable can be a time-consuming hassle.

We’ll cut to the chase: Yes, fuel cards can save you money, but not all fuel cards are the same. In this article, we’ll explore what fuel cards are, their benefits, the different types of gas cards currently available, and how they can lower your costs and improve your fleet’s fuel management.

Short on Time? Here Are the Key Takeaways

  • Fuel cards can save money through fuel discounts, streamlined expense tracking, reward programs, and fleet insights.
  • Several fuel card types and providers exist. They cater to different business needs such as national vs. regional fleets, and specific fuel types.
  • When choosing a fuel card provider consider factors like your fleet size, typical routes, fuel types, and desired card features.
  • Many fuel card providers offer valuable fleet insights, such as spending patterns, driver behavior, and route information.

What Is a Fuel Card?

Fuel cards, or fleet fuel cards, are credit cards specifically designed for gas station purchases and expenses related to automotive repairs and maintenance. They offer discounts, rewards, and rebates on fuel purchases, which can help businesses lower their fuel costs.

Businesses with automotive fleets, like trucking, shipping and delivery, and taxi and rideshare companies often provide these cards to their drivers. This allows them to pay for fuel at participating stations and receive cost savings, reward points, or other benefits in return.

Many fuel cards also offer several other advantages over more traditional expense reimbursement methods, making them a popular choice for fleet management. These can include expense tracking, fleet insights, spending controls, and driver behavior insights. Some fuel cards require a certain credit score for you to use them, while other fuel cards can be obtained without a credit check.

Can a Fuel Card Save You Money? The Results Are In

As we’ve covered, fuel cards tend to save you money, but not all fuel cards are the same. Some offer cashback, others offer reward points, and some offer benefits at both gas stations and repair shops, while others only provide fuel benefits. Let’s explore the savings in more detail below.

Discounts at the pump

Universal fuel card providers offer discounts at all gas stations, whereas branded fuel cards only provide discounts at participating gas stations. These rebates can range from a few cents per gallon to 2% or more, with some offering as much as 4%.

Several fuel cards also offer discounts on other expenses besides gas and diesel. These include categories such as lodging, meals, office supplies, and mobile phone plans. Many fuel cards offer 1% cashback on all purchases, which is the standard for most regular credit cards.

Redeem cash or rewards

Like most credit cards, fuel cards offer either cashback (which can be credited to your account), rewards points (which can be redeemed for fuel, travel, lodging, meals, etc.), or both. Fuel cards have online portals where you can convert reward points to cash, use them to pay down account balances, or make purchases.

Reduced administrative costs

Fuel cards help eliminate the need for costly manual expense reporting and receipt tracking. Instead, transactions are automatically recorded, saving time and simplifying expense tracking. Many fuel card providers automatically organize expenses into categories, so you know how much each driver spent on fuel, lodging, meals, and more.

Curbs unauthorized and unexpected spending

Fuel cards allow you to set spending limits, restrict purchases to specific locations or amounts, choose who can use the card, and determine authorized purchases, such as fuel, maintenance, and repairs, versus unauthorized, like food, entertainment, or personal care items.

This allows you to set up rules that automatically approve and record permitted expenses and deny anything unauthorized, saving you money and reducing the misuse of company funds. You can also be alerted to prohibited usage so you can take action immediately.

Control cash flow

Gaining insights into employee fuel spending, and implementing controls over that spending, can allow businesses to improve how they manage their cash flows month over month. By understanding how much your employees are spending, and when, you can ensure your cash inflows match your expected cash outflows in future months.

This can help you avoid going over budget on fuel costs, making your business more cash-efficient. It can also help you manage your employees, informing them of their fuel budgets ahead of time, and having constructive conversations with those who overspend.

Manage costs with fleet insights

Many fuel card programs offer detailed insights into your fleet’s performance and activities to help you optimize routes, identify areas for improvement, and reduce costs. These insights can include:

  • Fuel consumption: Track fuel purchases by vehicle, allowing you to identify gas guzzlers, drivers with poor driving habits, or inefficient routes.
  • Driver behavior: Analyze data like refueling frequency, locations, and time of day to identify areas for improvement, such as excessive idling or unnecessary trips.
  • Route optimization: Analyze fueling locations to identify the most efficient routes for your fleet, potentially reducing fuel consumption and travel time.
  • Maintenance trends: Gain a better understanding of your fleet’s maintenance trends. Combine this data with mileage information to help predict maintenance needs and schedule preventative services more effectively.
  • Vehicle performance: Learn about each specific vehicle’s performance, such as gas mileage and repair frequency. This can help you predict your vehicle’s useful life and plan for replacements down the road.

The insights fuel cards can give you on how, what, and why your drivers are spending money could also help you reward hard-working drivers more effectively. This can help reduce employee turnover and training costs, and keep your best drivers happier for longer.

Prevent the loss of funds

Using a fleet fuel card can also improve your financial security and prevent loss of funds by trading cash or checks for a more secure credit card option. This can help minimize the chances of thieves accessing your driver’s funds because rather than carrying cash they’ll carry a credit card that can be canceled any time.

Additionally, large banks offer a suite of security features, including identity verification when using a fuel card, end-to-end encryption to ensure your data is secure, fraud prevention features, and the ability to cancel and replace your fuel card in the event of theft.

Banks also offer insurance on your bank accounts and credit cards, which keeps your money secure and reimburses you if an unauthorized charge is placed on your card due to theft. All of these features help minimize your risk and keep your financial information secure.

Different Types of Fuel Cards To Consider

Not all fuel cards are created equal. Some offer benefits in specific regions or at specific gas stations, while others provide benefits on gas purchases but not other job-related expenses. Below, we break down the different types of fuel cards to consider:

Universal fuel cards

Universal fuel cards offer rewards from fuel purchases at any gas station and on any fuel type, generally without restrictions. They allow the flexibility to purchase fuel at any location, rather than relying only on specific fuel providers.

Wex Fleet Card, FleetCard by FleetCor, Marathon, Voyager, and Fuelman are all examples of popular universal fuel cards in the US.

Branded fuel cards

Branded fuel cards only offer benefits at specific gas station chains, like BP, ExxonMobil, Marathon, Chevron, and Texaco. Generally, the banks issuing these types of fuel cards have partnerships with the fuel brands. Branded fuel cards may offer higher reward amounts as an incentive to use them over universal fuel cards.

Branded fuel cards are ideal for fleets with routes that line up with certain gas station chains. They often offer increased benefits, and because a small percentage discount could result in significant savings every year, these cards are worth considering for fleets that can maximize their use.

Fuel-specific cards

Some fuel cards restrict purchases to specific fuel types, like gasoline or diesel. This can help reduce costs for fleets with particular fuel needs, like those who require premium, unleaded, or diesel fuel for their fleet. However, this type of fuel card can be limiting since they generally only offer increased benefits on specific fuel types compared to more generalized, universal fuel cards.

Discount vs. fleet management cards

Discount cards primarily focus on offering lower prices on fuel, either through cashback, reward points, or rebates. They’re ideal for fleets with straightforward fleet management needs, such as local last-mile delivery companies, or those already using an effective fleet management solution.

Fleet management cards, on the other hand, are designed to offer additional features like spending controls, data analytics, and purchase restrictions. They’re ideal for the complex requirements of large national or international shipping companies, or those seeking to closely integrate their expense tracking functions with their fleet management solution.

Fuel card fees and interest rates

As with any credit card, it’s worth taking fees and interest rate charges into account when choosing a fuel card for your business. Fuel card fees can include annual fees, late fees, balance transfer fees, over-limit fees, card replacement fees, foreign transaction or currency conversion fees, and more.

Similarly to credit cards, interest is only charged on fuel card balances when you don’t pay the balance by the due date. Therefore, with good card management practices, it’s possible to keep fees and interest to a minimum.

Verdict

Fuel costs are a major expense for many businesses, and managing a fleet can be a significant administrative challenge. Fuel cards provide a compelling solution, offering fuel discounts, reward programs, reduced administrative costs, fleet management functions, as well as greater control over spending.

To learn more about fuel cards, check out our guide to the best fleet fuel cards in 2024. If you’re ready to take it a step further and find a fuel card that fits your needs, our fleet fuel card comparison tool can get you a quote quickly.

FAQs

How do I choose the right fuel card provider for my business?
To choose the right fuel card for your business, consider your fleet size, typical routes, fuel type, desired features and benefits (discounts vs. fleet insights), and budget when making your decision. It’s important to compare fees and interest and weigh them against the potential cost savings when choosing a provider.
Are there any fees associated with fuel cards?
Yes, some fuel card programs charge membership fees to use their card and receive benefits. These fees are often charged annually, but can also be quarterly or monthly. Fuel cards may also have per-transaction fees, inactivity fees, foreign transaction fees, over-limit fees, and balance transfer fees.
How much can I save with a fuel card?
The savings you can earn through fuel cards depends on the specific program, network, and fuel prices. However, discounts of a few cents or a few percentage points per gallon can add up significantly, especially for businesses with larger fleets. Small businesses can benefit from fuel cards as well, taking advantage of discounts, reward points, fleet insights, and control over fuel spending.
Written by:
David is a Certified Public Accountant and prolific finance writer, specialising in taxes, business accounting, and corporate finance. He holds a BSc in Accounting and has worked as a CPA, tax accountant, and senior financial accountant for several years. David has written and edited thousands of articles for millions of monthly readers, and has contributed to the likes of Investopedia, The Balance, OnPay, and now Expert Market.