Living with credit, Rewards

Sears Mastercard is an odd but good choice for gas rewards

Mike Cetera
Sears Mastercard is an unlikely winner for gas rewards

When it comes to household spending, the annual cost to fuel up your car is about as much as the typical household spends on clothing but much more than it spends on cellphone service.

In other words, gas accounts for a more-than-modest portion of people’s budgets – at least according to the Bureau of Labor Statistics.

That’s one of the reasons I’m always mindful of using the credit card that gives me the most rewards on gasoline purchases.

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For years now, I’ve relied on the Blue Cash Preferred® Card from American Express, which pays 3 percent cash-back on spending at U.S. gas stations. Combined with its generous grocery rewards (6 percent at U.S. supermarkets on up to $6,000 in annual spending, then 1 percent), this has long been a top-of-wallet credit card for me.

In fact, last year I spent $2,306.24 at gas stations and earned $69.19 in cash back rewards on gas purchases alone. I can easily justify the card’s $95 annual fee.

A better card for gas rewards

A recent Bloomberg headline about a renewed partnership between Sears and Citi, which will continue issuing the store’s co-branded credit cards, got me thinking. The headline read: “Citi’s logic in Sears deal is that most card spending is done elsewhere.”

The story explained why Citi was interested in a $425 million deal with the struggling retailer, which just last week announced it would close dozens of unprofitable stores nationwide. Citi knows that 70 percent of spending on Sears credit cards are done … not at Sears.

There are some smart people out there taking advantage of this. They have seen just how good these rewards are, particularly when it comes to gas purchases. The Sears Mastercard pays 5 percent back on eligible gas station purchases. Few credit cards can match that.

In my case, I would have hauled in $115.31 last year had I paid at the pump with the Sears Mastercard instead of Blue Cash Preferred, or about $50 more than I actually earned.

Sears Mastercard has its challenges

There are a number of potential landmines you may encounter by using the Sears Mastercard to earn gas rewards.

Here are three:

1. Sears could shutter all of its stores.

Given this retailer’s chronic struggles, this is not an inconceivable outcome.

Citigroup’s chief executive officer appears to allude to this possibility in the Bloomberg story, saying the Sears deal includes “a provision that ensures that the bank will own the portfolio ‘in any future scenario.’”

Citi is going to want to keep those folks happy in the event Sears folds.

2. The Sears Mastercard’s APR is high.

If you’re picking up this credit card to earn rewards, odds are you pay your credit card bill on time and in full each month.

That’s the way it should be done. But if you have to carry a balance, this card can prove problematic.

Like many co-branded store cards, the Sears Mastercard carries an exceptionally high annual percentage rate.

Don’t get this card unless you can pay it off without incurring interest.

3. Redemption can be a struggle.

The other big problem with the Sears Mastercard card is that it’s not really a cash back card, even though it’s cleverly advertised as returning a percentage back on your purchase.

I spotted dozens of ads hawking this card at the Sears near my north Texas home (and I only visited the first floor of the store). In these ads, the Mastercard is touted as providing “5 percent in points on eligible purchases at gas stations,” “3 percent in points on eligible purchases at grocery stores and restaurants,” “2 percent in points on eligible purchases at Sears and Kmart” and “1 percent in points on all other eligible purchases.”

These Shop Your Way points can only be redeemed to pay all or part of your purchase at eligible Sears Holding stores. Aside from the awards, the reason I love using my AmEx card for gas purchases is that I get statement credits. I’ve consistently used these rewards to offset end-of-year holiday spending.

How to take advantage of this deal

You can still do this with the Sears Mastercard – if you’re willing to put in a little extra work.

My main reason for visiting my local Sears recently wasn’t to spot the ads for the credit card. It was to see if Sears sold other stores’ gift cards.

Sears does.

While you can’t convert your rewards into cash, you can buy gift cards to Amazon and other retailers. This would still allow me to offset my gift purchases since I’m not a regular Sears shopper.

And $50 extra a year (what I would earn had I used the Sears card in 2017) is enough for a pretty nice gift.

See related: Gas cards and auto rewards, 2018 gas card survey: Gas cards trail in the race to fill up your wallet, How credit cards take a bite out of rising gas prices

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  • Brenda

    Actually you can get your rewards back in cash for Sears Mastercard. You just have to get them through a different website from Citibank . You can choose gifts cards, donations, or cash.