Get cashback on your petrol purchases

Two new credit deals offer you money back when you spend on petrol.

The AA has launched a brand new credit card that gives drivers cashback on their petrol purchases.

The AA Reward Plus Visa card offers 3% cashback on all fuel purchases and 0.5% on everything else.

Every time the card is used, points are awarded that can be redeemed for cash or for a wide range of other goods and services, including AA products, insurance and membership.

So, is the card any good?

It’s not bad. 3% cashback is pretty good compared to what else is out there at the moment. And the straight-up 3% on petrol, 0.5% on everything else isn’t complicated with spending tiers or limited periods like some cashback cards.

However, the 3% cashback on fuel does come with a maximum spend of £2,000 a year which amounts to a total of £60 cashback. After that you’ll just get 0.5% on petrol too. The AA’s keen to point out, though, that £2,000 is the equivalent of filling your car up about 60 times and higher than the average annual spend on petrol of about £1,700.

However the APR on the AA card is 19.9% so unless you can pay off the bill in full each month then it’s likely that interest charges will dwarf any cashback you receive.

Any downsides?

At the moment the card is only in the trial phase and only available to AA members. But, with about 15 million members, around half the drivers in the UK are AA members. To apply you’ll need your personal AA membership number.

Rival cards

Tesco Clubcard is also targeting drivers with a special credit card offer available until 2 September.

Customers opening a Clubcard credit card online before this date who spend £20 or more on their card at a Tesco Petrol filling station (excluding Esso fuels) within the first month of opening their account, will receive a £5 Tesco giftcard for money off their next fuel purchase.  So basically just for opening the account you can get £20 worth of petrol for £15.

The Tesco Clubcard credit card then gives drivers five points for every £4 spent when buying fuel at Tesco. This is made up of one point per £1 (twice what you would get with a standard Clubcard) plus one additional point per £4 spent on the credit card.

Alternatively, the MBNA American Express credit card offers cashback of 1.5% on supermarket and petrol spending.

All the big petrol stations - BP, Shell, Esso, Texaco, Q8, Jet and the supermarket-brand stations - participate and cardholders also get 0.75% cashback for non-petrol purchases.

Other cashback and reward cards

Typically American Express and Capital One battle it out to be the best cashback card.

The Amex Platinum credit card offers 5% cashback in first three months up to £100. Cardholders get tiered cashback up to 1.25% after that, with no limit on how much they spend.

Capital One World Mastercard offers 5% cashback on purchases for three months and up to 1.25% after that. While these may seem idential offers, there are some subtle differences. Have a read of The new credit card that offers 5% cashback on ALL spending for more.

The golden rule to remember with reward and cashback cards is that they will only be worthwhile if you can repay your bill in full every month. Otherwise you’re likely to pay more in interest than you receive in rewards or cashback.

Petrol Prices

At the moment it’s a good idea to shop around for petrol as some companies are lowering their prices.

This means that Tesco customers might find that Tesco is not the cheapest place for petrol at the moment even after taking Clubcard points into account.

This week saw rival supermarkets Asda and Morrisons both cut petrol and diesel prices following the recent dip in oil prices.

Asda has reduced prices by 2p per litre at most of its 188 forecourts, and introduced a cap of 132.7p per litre for unleaded and 136.7p per litre for diesel at all its filling stations.

Meanwhile Morrisons has implemented a 2p per litre cut to unleaded and a 1p cut to diesel, but not introduced a cap. Its average prices before the drop were 134.6p for unleaded and 138.8p for diesel.

This compares to an UK average 136.5p for unleaded and 140.6p for diesel, according to the Petrolprices.com website.

More: Compare credit cards | Petrol prices soar despite oil costs falling | A clever way to save a packet on a second-hand car