Fuel Cards
A fuel card is used by businesses with regularly-used company vehicles to earn discounts and rewards on purchases at the pump.
OVERVIEW
A fuel card is a payment card for businesses, used most commonly for gasoline, diesel, and other fuel-related purchases at gas stations. Small businesses use fuel cards to help them manage their regularly-used company vehicles through controlled limits and online expense tracking. Fuel cards also have perks such as special discounts and cash rebates on gas.
A business owner’s personal credit score is typically the main factor for fuel card qualification. Nav offers a free personal credit check as well as 2 free business credit report summaries. You can check your credit for free.
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How Fuel Cards Work
Fuels cards are recommended for businesses that use company vehicles regularly. You can efficiently keep track of your fuel purchases while saving money on gas through special discounts. Fuel cards are used like a regular credit or debit card and are a vital business budgeting tool for both small and large companies.
Fuel Cards at a Glance
| Average APR | 23% |
| Setup Fee | From $0.00 to $40 (depending on the provider) |
| Monthly Recurring Fees | From $0.00 to $2.00 (depending on the provider) |
| Discount and Rewards | From $0.00 to $0.04 per gallon |
| Credit Score | 650+ |
| Liability | Either joint (personal plus business) or business-only |
Just like a traditional small business credit card, most business fuel cards allow the cardholders to float balances after they pay the minimum monthly required payment, usually 2.5% of the remaining card balance or $20, whichever is higher. The floated balance is subject to interest charges.
Fuel cards can typically set spending limits on individual cards as well limit the types of purchases an employee can make. Small businesses with multiple employees may a card for each employee. Some fuel card providers allow businesses to have unlimited cards at no additional charge while other providers will charge for each additional card or after 5+ cards. Typically this is a one-time fee, not a monthly per-card fee.
Who is a Small Business Fuel Card Right For?
Many business owners will have a small business credit card and wonder if they also need a fuel card. Though a credit card may also be used to purchase fuel, a separate fuel card (intended for fuel purchases only) is beneficial. Fuel cards are ideal for businesses who have work-related fuel expenses and want to have control on the following:
- Lower credit utilization ratio - The ideal usage is below 33%. If your business needs to use a general small business credit card for other purchases, having a separate fuel card for fuel purchases will help lower your business’s credit utilization ratio since it increases your overall credit limit.
- More control on spending for fuel cards - Because a fuel card lets you put spending caps in place, it can help ensure that it’s used is for business purposes only. It can also lower the risk of unauthorized spending.
- Reduce personal liability - There are some fuel card providers that allow for business-only liability. However, individual cardholders might still be responsible for transactions on their card.
How to Qualify for a Fuel Card?
Some fuel card providers allow for business-only liability while others require joint liability (i.e. both the business and business owner are jointly liable for all cards on the corporate account). This liability includes responsibilities for the payment of card balances, interests, and any late fees or delinquent payments.
Joint liability requires a joint application. The usual qualification requirements for joint liability fuel cards include the following:
- Personal credit score of 650 or higher (check your credit score for free here).
- Good business credit history
To qualify for business-only liability, the personal credit score is no longer considered. Instead, the following are the qualification requirements for business-only application:
- Good business credit history
- With at least 3 years of business records (must be operational for at least 3 years)
- Annual revenue of at least $1 million
Fuel Card Costs
The costs of fuel cards vary widely from one provider to another. The standard APR is 23% and is charged if you carry a balance. Some fuel cards providers also charge a one-time setup fee upon account opening, while others do not. What’s more, some charge a one-time new card fee per card. Monthly recurring fees may also be charged depending on the providers.
Overview on Cost of Fuel Cards
| Average APR | 23% |
| One-time Setup Fee (per account) | From $0.00 to $40 (depends on the provider) |
| One-time New Card Fee (per new card) | From $0.00 to $5.00 (depends on the provider) |
| Monthly Recurring Fees | From $0.00 to $2.00 (depends on the provider) |
Other possible costs associated with fuel cards include:
- An annual card fee
- Release fees to break contract before end of agreement
- Monthly or annual account management fees
- Fraudulent transaction fees
Bottom Line
Small business fuel cards are a good option for businesses that have recurring gas-related expenses. Fuel cards provide comprehensive and easy-to-access transaction reports, and allows the business owners to manage their fuel purchases through controlled card limits. This is in addition to the special discounts and rewards associated with the use of fuel cards.
A business owner’s personal credit score is typically the main factor for fuel card qualification. Nav offers a free personal credit check as well as 2 free business credit report summaries. You can check your credit for free.
The Details:
Maximum Loan Amount
N/A
Typical Loan Term
N/A
Typical Interest Rates
23%
Speed
7 - 10 business days
Down Payment?
N/A
Collateral
N/A
Personal Guarantee?
Yes
Have a question?
Pros
Most fuel cards providers offer the ability to restrict purchases.
Small business fuel cards provide various reporting and analytics capabilities.
Business fuel cards offer special discounts and rewards based on the gallons you purchase per month.
Cons
Fuel cards can cost a monthly fee per card.
Fuel cards only work at participating locations.
Most fuel cards hold the business owner jointly liable for card transactions.
How to Apply
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Additional Resources
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