Slash your costs at the petrol pump

Petrol prices are still at inflated levels, but with these simple steps you can cut how much you spend when filling up.

Every time I drive past a petrol station the prices have gone up by at least a penny. Not so long ago when prices were threatening to break the £1 a litre mark, people were up in arms. Demonstrations took place as we fought to keep prices at a ‘reasonable’ level, all to no avail.

The environmental, economic and political factors that are causing these inflated costs may be out of our control, but do not despair. There are a few things you can do to lessen the fuel burden on your weekly budget.

Practical tips

There is plenty of practical (and sometimes obvious!) advice around, like not carrying around unnecessary heavy items and keeping your speed down, but it is worth a quick reminder of the five most useful points.

1) Don’t ‘warm up’ the engine before you set off, at least as far as petrol engines are concerned. Modern engines are designed to start from cold – warming them up simply eats fuel and increases wear.

2) Watch your revs when you are changing up gears – aim for around 2,000 for a petrol car and 2,500 for a diesel.

3) Plan your journey and aim to use the cheapest stations en route using a website like www.petrolprices.com. Never fill up at motorway services – where other stations are currently charging around 135.10p for unleaded, you could pay as much as 149.9p on the motorway!

4) Don’t waste your money on super unleaded petrol. Contrary to popular belief it does not make your engine more economical.

5) Take advantage of supermarket petrol promotions, offering around 5p off a litre when you spend a set amount in store.

So, that's the practical tips out of the way. But if you're already doing all of those, what else can you do?

Cashback credit cards

Cashback credit cards have been around for a while, and since the spiralling cost of petrol has hit UK consumers hard, there are now cards on the market that are specifically geared towards attracting cash strapped motorists.

Whilst they are a good idea in principle, these cards are not always what they seem. Some have been accused of being little more than promotional gimmicks.

Take Barclaycard which earlier this year launched a new deal offering an impressive 10% cashback on fuel purchases. However, this offer expired quickly and the total amount of cashback that a customer could earn was capped at £30.

So, while the odd pound or two earned in cashback might be a welcome bonus, it shouldn’t be a deciding factor when choosing a credit card.

Pros and cons of cashback cards

A new cashback credit card has been launched this month, the Santander 123 cashback card, with a rate of 3% on petrol purchases. I've put together the table below to help you compare the various cashback cards.

Company	Petrol cashback	Other cashback	Cap on earnings	Annual Fee	Restrictions	Minimum Income
Santander 123 Mastercard	3%	2% in department stores, 1% in the supermarket	Maximum of £108 a year	£24	No cashback paid on other purchases	£7,500
AA Rewards Plus Visa Card	3%	0.5%	Maximum of £60 a year	N/A	Must be an AA Member	N/A
MBNA American Express	1.5%	1.5% in the supermarket, 0.75% elsewhere	No cap.	N/A	N/A	N/A
MBNA Visa	1.25%	1.25% in the supermarket, 0.5% elsewhere.	No cap.	N/A	N/A	N/A
Capital One World Mastercard	5% (for 3 months, tiered rates up to 1.5% thereafter)	5%	Max £100 in first 3 months at the 5% rate	N/A	Must be a homeowner	£20,000
American Express Platinum	2.5% (for 3 months, 1.5% thereafter, though rises to 2.5% for anniversary month each year)	2.5%	No cap	£24	N/A	£30,000

Points to note

Santander 123 Mastercard: This card splits cashback into different rates, and you get nothing if you spend outside the specified categories. It is the only card which pays out your cashback each month, but its big downside is the annual fee of £24. You have to do quite a bit of driving to make it out-perform other cards.
AA Rewards Plus: Even if you are an AA member you are not guaranteed the advertised rates! The card is currently a trial product and apparently only 2,000 cards are available at the higher rate, so you might find yourself on a less impressive rate of 0.5% - 1%.
MBNA American Express and Visa cards offer much lower cashback percentages. Amex has the slightly higher rate, but is not accepted as widely as Visa. The higher rate can only be earned at specific petrol stations and supermarkets, and the small print reveals that purchases from Marks & Spencer, Tesco Direct, Tesco Homeplus, Farm Foods and Spar are excluded (they will only earn the lower cashback rate). On the plus side neither card has any restrictions to speak of and there is no cap on earnings. However, all this tells me is that with the low rates on offer, your earnings obviously don’t need to be capped!
Capital One World Mastercard: This card gives cashback of 5% on ALL purchases, including petrol. The 5% only lasts for 3 months, and the amount you can earn is capped at £100. After 3 months the rate of cashback is paid in an over-complicated tiered system from 0.5% to 1.25%. Again, this rate is not capped – because it doesn’t need to be.

Remember, cashback cards will only work for you if you pay them off in full each month, so set a Direct Debit to avoid charges. APR’s for the cards above range from an average of 18.9% to 19.9%, which will eat into any cashback earned very quickly!

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