What is a fuel surcharge waiver on a credit card?

Credit cards offer benefits and reward points on making a variety of expenses such as shopping-related expenses and purchasing movie tickets. Another key benefit offered by most credit cards is the ‘fuel surcharge waiver’. While comparing credit cards to find the most suitable one, you might notice that the fuel surcharge waiver offered by a credit card generally ranges between 1% and 3% of the total fuel expense. Credit card companies offer customers the benefit of the fuel surcharge waiver to help them reduce the additional fee they pay while paying for their fuel. 

What is fuel surcharge waiver?
 

A fuel surcharge waiver is an exemption on the ‘fuel surcharge’ fee that you pay while making a fuel purchase using your credit card. The fuel surcharge waiver ranges between 1% and 3% and is applicable at select fuel stations (as decided by the card-issuing bank). It also has a minimum transaction amount and a minimum waiver limit.

How is a fuel surcharge calculated?
 

As mentioned earlier, a fuel surcharge waiver is a percentage of the total transaction amount for a fuel purchase. If the waiver is 2.5% and the transaction amount is ₹5000, the fuel surcharge would be reduced to = ₹ (5000 * 0.025) = ₹ 125. The higher the fuel surcharge offered by your credit card, the higher an amount you can save while paying for fuel using your credit card.

What are fuel credit cards?
 

Banks offer specialised credit cards called ‘fuel credit cards’ that can help you further reduce the amount you payon fuel purchases. . These cards often come with additional savings in form of cashback or rewards on fuel purchases along with the general benefits of a credit card. 

IDFC FIRST Bank’s FIRST Power+ credit card is one of the most popular fuel credit cards in the market. Co-powered with HPCL, it offers ₹500 cashback on the first HPCL fuel transaction of ₹500 and 5% cashback (up ₹1,000) on the first EMI conversion. In addition, the FIRST Power+ credit card offers 6.5% savings on fuel purchases amounting to an annual savings of up to ₹18,500 which is enough to buy 175+ litres of fuel. You also enjoy 5% savings on groceries, utility payments, and IDFC FIRST Bank FASTag recharges.  HPCL credit card by IDFC FIRST Bank, for instance, offers complimentary roadside assistance & personal accident Cover  on fuel purchases in addition to a fuel surcharge waiver.

What does a fuel surcharge waiver on a credit card mean?
 

While paying for petrol or diesel at a petrol pump in India, all individuals must pay an additional charge called the ‘fuel surcharge’. Since petroleum corporations are not entitled to pay any transactional fee, it is borne by the customer. Usually, a fuel surcharge ranges between 1% and 3% of the total fuel purchase amount. Credit card issuers might also impose a fixed sum as a fuel surcharge fee on fuel payments. This fee compensates for the processing costs associated with fuel transactions at the pump. To avail a fuel surcharge waiver on a credit card, you must satisfy certain criteria such as minimum fuel expenditures as specified by the bank.

A ‘fuel surcharge waiver’ helps you avoid excessive fees while paying for fuel and for individuals who prefer to explore highways in style, IDFC FIRST Bank’s metal credit cards offer a fuel surcharge waiver of 1% of up to ₹400 on the Ashva credit card, and up to ₹500 on the Mayura credit card.. You enjoy a range of premium benefits like complimentary airport lounge access every quarter, trip insurance, roadside assistance and entertainment benefits every month by signing up for an IDFC FIRST Bank metal credit card.

How can you get a fuel surcharge waiver with a credit card?
 

You must follow these steps to get a fuel surcharge waiver using your credit card –

1. Research fuel credit cards online and compare their features (including fuel surcharge waivers): As the first step, you must research various fuel credit cards and compare their fuel surcharge waivers before signing up for a card. Fuel surcharge waivers, as mentioned earlier, range between 1% and 3%. Choose a card that offers a higher fuel surcharge waiver.

2. Check if the card’s rewards are relevant to your spending patterns: The other features offered by the fuel card must be relevant to your spending patterns and categories.

3. Check the cap on transaction value and maximum waiver: Every fuel surcharge waiver feature has a maximum transaction value limit and a limit on the maximum waiver offered. Check these limits and compare them for various cards.

4. Check if the petrol pump where you can avail the fuel surcharge waiver is close to where you stay: The fuel surcharge waiver can be availed at particular petrol pumps across India (as specified by the bank). Check if these petrol pumps are accessible to you.

How does the fuel surcharge waiver work?
 

Briefly put, a ‘fuel surcharge waiver’ is a percentage of the total fuel purchase you make using your credit card. You must know about a few more terms related to the fuel surcharge waiver feature to know how it works –

• Minimum transaction amount: You should have transacted a minimum transaction amount to be eligible for a fuel surcharge waiver. Different card-issuing banks have different minimum transaction amounts as criteria for the fuel surcharge waiver feature.
  
  
• Maximum waiver limit: The waiver limit is the limit up to which the fuel surcharge waiver is applicable. If your fuel transaction amount goes beyond this limit, you may incur surcharge costs.
  
  
• Annual fees: Banks might levy an annual fees on certain credit cards offering a fuel surcharge waiver.

What is a fuel surcharge waiver cap?
 

A ‘fuel surcharge waiver cap’ is another term for the maximum waiver limit. This is the limit up to which the fuel surcharge waiver is applicable on a given transaction amount. Different banks define this cap differently. You must check the fuel surcharge waiver cap fixed by a bank before signing up for its credit card.

Important things to remember about fuel surcharge waivers on a credit card
 

Here are a few important points that you must remember related to the fuel surcharge waiver feature offered by credit cards –

• A fuel surcharge waiver is a percentage of the total transaction amount spent towards fuel-related expenses. It generally ranges between 1% and 3%.
• Banks fix a ‘minimum transaction amount’ that you must meet in order to be eligible for a fuel surcharge waiver.
• Fuel surcharge waivers are not discounts on fuel purchases. However, they help you reduce the extra cost of using your credit cards at petrol pumps.
• Usually, you must spend between ₹ 400 and ₹ 4000 to enjoy the benefits of a fuel surcharge waiver.

Conclusion

Fuel surcharge waiver on a credit card can significantly reduce the additional charges incurred while purchasing fuel, making it a practical benefit for regular commuters. By selecting a card that offers a high waiver percentage and knowing the maximum cap, you can optimise your savings with a credit card on purchases. Based on your preference, you can choose an IDFC FIRST Bank’s credit card that comes with a fuel surcharge waiver along with other rewards and benefits, ensuring a seamless and rewarding shopping experience.