The people with average to poor credit don’t have the same advantages as those with good to excellent ratings. Those individuals tend to enjoy perks like rewards cards that offer lucrative benefits not only as far as their countless rewards but incredible sign-on bonuses.
Those with less favorable credit need to strive for these sorts of cards as they work diligently to improve their scores to as great as “740” if they want to be considered an exceptional candidate on the FICO scores.
That doesn’t rule you out entirely from rewards if you’re on the lesser end of that scale. Expectations need to be adjusted just a tad, and look into a vaster array of options for financial solutions. The credit cards that offer rewards for those in the lower categories tend to be geared toward specific purposes like retail or fuel.
A drivstoff Kort (translation: fuel card) might not be the ideal solution you’re looking for, but everyone needs to start their credit path somewhere. These have the potential for giving decent benefits if you research the options and choose carefully before finally committing. Let’s look at the choice more closely.
What Is A Petrol Card
You might not be looking for a gas card as your financial solution. Your ideal would be one of the popular credit cards that give exceptional benefits to their members, but the problem is your credit rating.
With lucrative benefits needs to come to an excellent credit score. If that’s missing, you need to reduce your expectations by looking more into cards driven towards a specific purpose, like a retail card or the petrol option.
Many people opt for the fuel card when given the two choices because these can genuinely help you accumulate rewards each time your tank is filled.
Plus, you have the benefit of using the financial tool to establish a solid credit rating, eventually leading to your ability to claim one of the more prominent cards you might be dreaming of.
In many cases, petrol cards provide rewards based on a percentage of what you spend, reminiscent of cash-back cards. The difference is rewards with less than favorable individuals are not as lucrative, and the indication is there are fees attached.
Typically when speaking of average to the poor credit rating and gas cards that coincide with those individuals, there are two sorts to choose from.
- “Closed-loop:” These cards provide gas but not any other sorts of purchases and only if you shop with specific brands. It’s a “gas-only” card.
The thing to think about before committing to this specific option is the interest rates are exceptionally high, with some ranging as great as roughly 26+% if you carry a balance on the card despite okay reward offerings.
- “Traditional Gas Rewards:” Consumers have the potential for earning rewards for petrol purchases and all other kinds. There are no restrictions such as being brand-specific when stopping for fuel or other purchases.
The choice is more practical since you can go to the station of your choice and you can use these for any other items you want instead of merely gas. Learn a few tips on how to save on fuel costs at https://www.focus2move.com/7-tips-and-tricks-to-save-on-fuel-costs/#.
The Function Of A Fuel Card
You can readily apply for a petrol card online with varying eligibility requirements based on the card you’re interested in obtaining. The prime fuel cards allowing earned rewards traditionally go to those exhibiting good to excellent credit ratings.
Those showing a FICO score that deems average to poor (580-699 or 579 and below) may only be eligible for store-brand options or rewards cards specifically for those showing less than favorable scores.
With some issuers, you can earn either cash back or points depending on the amount you spend on fuel or another purchase. With the “closed-loop” cards that are brand-specific, there might be the option to receive discounts instead of rewards for each gallon of petrol purchased.
Generally speaking, whether a fuel card will be advantageous to you really is based on which option you’re eligible for and how its reward system works. Be mindful that these are credit cards. In saying that, you’ll be charged interest when a balance carries over.
That means you should make every effort to pay the balance in full with each monthly installment to improve your credit standing. Carrying a balance with accrued interest does affect ratings. Click here for guidance on fuel card savings tips.
Rebuilding Credit Through The Use Of A Petrol Card
When attempting to rebuild or improve a credit rating, credit cards are among the most beneficial financial tools to do so if you use them adequately. When your rating is low or poor, you might have to start with something like a fuel card to begin the process.
Still, that doesn’t matter as long as the issuer reports your payment behavior to the three bureaus. The idea is to use the card reasonably, keeping the balance low so the monthly installments can be paid in full on the due date consistently.
Carrying a hefty balance over to the next month will hinder your attempts to improve your rating, not to mention the interest rates on these cards are exceptionally high.
Carrying balances can eventually lead to a debt cycle that can be difficult to break. Some of the advantages of re-establishing a positive credit standing with a gas card include:
- Approval: Many fuel cards are relatively easy for those with average to poor credit standing to obtain since many are “gas-only” purchases or standard rewards that are geared towards individuals with less than favorable credit.
If you’re having trouble getting any other sort of card, you will likely find a positive response when trying for a petrol option.
- Bureaus: It’s crucial to maintain good payment behavior with the issuer since these companies will likely report whether you’re consistent and reliable to the three credit bureaus.
That includes paying the balance in full each month instead of carrying it to the next month along with what would be a high-interest accrual. That will impact your credit standing.
- Rewards/Discounts: The reward programs are not as lucrative as some of the top-name credit cards reserved for exceptional credit scores, but some options provide rewards based on what you spend on gas.
Plus other products and sometimes with the brand-specific options, you might see discounts on your petrol.
While you may see some benefits with a petrol card, there can also be downsides. Let’s look at a few of those.
- Rewards: The rewards on the gas credit for those with average to poor credit can be less than favorable. Still, when looking at the bigger picture, the goal is to work towards a better credit stance in order to obtain more valuable credit opportunities.
- Fees/Interest: As with any financial solution, you will have interest accrual, but when you present with a poor credit stance, the interest will be much higher, plus there will typically be unfavorable terms like annual fees and on.
You won’t have to worry about the interest if you remain current on the installments paying the balance in full each month. The problem arises when you carry one over with the attached interest and fees.
- Secured: Some petrol options are secured for those with less than favorable credit. That means you need to use your funds to secure the spending cap.
It would go into a deposit, and you would use that for purchases, basically paying yourself back each month. If you default, the money in the deposit is used to pay the balance.
While you might see the whole idea of taking a gas card as your financial solution as a “con,” it’s essential to look at the positive side given the fact you could be ineligible for any credit if you’re standing is that inferior.
An opportunity to rebuild and improve is far superior to any rewards, points, or cash-back that you might receive as a benefit. Sometimes it’s better to look at what you’re working to achieve instead of what you might get out of the process.
There are probably few people whose goal is to obtain a petrol solution as their primary financial tool. But when you consider that it can lead to a better rating and the possibility of a better card in the future, it’s actually an awesome stepping stone