How a credit card can help you save on your everyday car costs

How a credit card can help you save on your everyday car costs

Brought to you by RateHub

 

A car isn’t just a transportation device that gets people from point A to B - in the same vein that a home isn’t simply a roof with some walls. In the eyes of many Canadians, car ownership represents everything from freedom and convenience to the ultimate passion purchase.

 

Similar to a home, however, a car is also one of the largest single-purchases a person will make in their life. And the costs go beyond the sticker price. From parking and gas to insurance, the additional costs of car ownership can add up. Interestingly, one of the most effective ways to save on the everyday costs of car ownership is by using a credit card.

 

Below, we break down the features found on some of the best credit cards in Canada that are the most useful to car owners (and their wallets).

 

Rewards

 

The majority of credit cards offer rewards that can help you save on your everyday spending, but not all are created equal.

 

Most cards offer extra rewards per dollar for certain types of purchases, known as bonus categories. If you’re a car owner who spends big on gas, you’ll want to ensure you find a credit card that has gas as one of its bonus categories.

 

The best cash back credit cards for drivers offer between 3% and 4% back on every dollar spent at the pump. Depending on the size of your gas budget (and car tank), that can add up to over $250 in savings on your gas spending alone. Meanwhile, if you’re a travel junkie, you can use a travel credit card to quadruple the points on gas and then redeem the points for a future flight or hotel stay.

 

Aside from gas, one of the largest recurring expenses associated with car ownership is insurance. If you automate insurance payments to your credit card, you can get additional rewards that’ll chip away a few dollars off your insurance each month. 

 

Factor in your other everyday purchases, (car related or otherwise), and you can rack up even more savings through a rewards credit card.

 

Side perks

 

While rewards are undeniably important, another way credit cards deliver value is by offering complimentary side perks. Travel insurance and extended warranty protection may be the most common and widely known when it comes to credit card perks, but did you know that some offer benefits that are tailored to car owners?

 

For example, a handful of credit cards offer road-side assistance. This free 24/7 coverage will kick in whenever your car is stranded and you require either a flat tire change, emergency fuel delivery due to an empty tank, towing because of a dead battery, and more. While purchasing road assistance can usually run you about $100 per year, with the right credit card, you can get coverage at no extra cost or at a considerable discount.

 

Discounts on vehicle rentals and free rental car insurance are some other perks offered by credit cards that can help you save on your car-related expenses.

 

Credit scores

 

If you’re looking to lease or loan a car, your credit score will impact your choice of vehicle (as well as what rate you pay). That can spell bad news if you have a bad credit score below the 600 mark.

 

The good news is that if you’re looking to improve your credit score, you can use what’s known as a secured credit card. While a secured credit card won’t offer you the type of rewards or perks highlighted above, they offer cardholders the opportunity to improve their credit score over time. Easy to be approved, these cards require you to put forward your own cash deposit which effectively acts as your credit limit. By using and paying back your deposit balance, you’ll build a history of making on-time payments and improve your credit score all while avoiding interest charges charged on a typical unsecured rewards credit card.