September 25, 2012
Several grocery store chains have rewards programs in which you can earn “fuel points.” Fuel points are used to get a discount when filling up your car’s gas tank. Kroger, for example, awards shoppers as follows:
- Grocery purchases: 1 fuel point per dollar
- Pharmacy Prescriptions: 50 fuel points
- Gift Cards: 2 fuel points per dollar
Every 100 fuel points gives you 10 cents off per gallon for one fill-up at a Kroger gas station or a participating Shell station. This can be a great way to save some money at the pump.
Calculating the value of a fuel point
Understanding the value of a fuel point is difficult because your savings are proportional to the number of gallons it takes to fill your tank. Your points are worth more if you use them for larger fill-ups. For example, if you redeem 100 points for a 10 gallon fill-up, you’ll save a total of $1 (10 gallons x 10 cents per gallon = $1). However, if you pump 20 gallons into your car or truck, you’ll save $2 for those same 100 points. In the former case, each point would be worth 1 cent, and in the latter case each point would be worth 2 cents.
So, the value you get from your points can be calculated easily by taking the number of gallons you pump and sticking a decimal point in the middle. For example, if you pump 12 gallons, then each point is worth 1.2 cents. For 15 gallons, each point is worth 1.5 cents. And so on.
Calculating % rebate on grocery purchases
Now that we have a way to calculate the value of a fuel point, we can estimate the % savings this gives you from your grocery store purchases. Let’s assume your average fill-up is 15 gallons. This means that each point is worth 1.5 cents. Now let’s go back to Kroger’s point earnings:
Assuming 15 gallon fill-ups:
- Grocery purchases: 1 point per dollar = 1 x 1.5 = 1.5% savings
- Pharmacy Prescriptions: 50 fuel points = 50 x 1.5 = 75 cents savings
- Gift Cards: 2 points per dollar = 2 x 1.5 = 3% savings
If you average smaller or larger tank fill-ups, then adjust the above chart accordingly. For example, suppose you average 20 gallons per fill-up:
Assuming 20 gallon fill-ups:
- Grocery purchases: 1 point per dollar = 1 x 2.0 = 2% savings
- Pharmacy Prescriptions: 50 fuel points = 50 x 2.0 = $1 savings
- Gift Cards: 2 points per dollar = 2 x 2.0 = 4% savings
Some people go to great lengths to ensure that they pump as much gas as possible with each fill-up as a way of maximizing their fuel points. I’ll leave those tricks to your imagination. However, it’s easy to stack savings at the grocery store:
Coupons: This is the obvious one. Of course you can reduce your grocery bill by using coupons.
Credit card: Use the best credit card for earning points / cash back. For example, the American Express Blue Cash Preferred card offers 6% cash back at grocery stores. Similarly, the American Express Hilton HHonors cards offer 6 points per dollar. With the Fair Trading Price of Hilton points at .48 cents, I value this as roughly a 3% rebate. Of course, you can also use a 5X everywhere trick to earn 5 Ultimate Rewards points per dollar. With the Fair Trading Price of Ultimate Rewards points at 1.31 cents, I value this as approximately a 6% rebate (after reducing the rebate % to account for the cost of reload cards).
Buy gift cards: Since gift card purchases give extra points, it’s worth finding gift cards that you’re sure to use at other merchants. For example, buy Shell gift cards to maximize your credit card and fuel point savings before going to the pump. An extra perk is that some gas stations which give discounts for paying in cash will give those same discounts for paying with a gift card! Note that in some cases you will need to pay inside to get that cash-only discount.
Gift card promotions: Often grocery stores will run promotions in which gift cards earn 4X fuel points instead of 2X. With 15 gallon fill-ups, this is like a 6% rebate when buying gift cards! Or, they’ll run $5 off $50 for certain gift cards. That may not sound like much, but it’s a 10% discount! Load up on gift cards (that you’ll actually use) during these promotions.
Do you leverage fuel points? What has your experience been? How have you maximized savings?