If you’re new to the world of fuel cards, you may be under the impression that secure and prepaid gas cards are one and the same or have only negligible differences. After all, they look the same and seem to accomplish the same objectives.
But each type of card is unique in its own way, and knowing the difference between the two can help you ascertain what type of card to use, personally or for your company’s fleet 1.
What is a Gas Card?
First things first: What is a fuel card?
A fuel card, also known as a gas card or a fleet card is a prepaid or secure card that’s used to purchase gas, diesel, and other fuels. These cards can also be used for maintenance needs and other vehicle-related expenses. In fact, depending on the specific fuel card you select, they can be called upon for:
- Repairs and maintenance
- Wiper blades and fluids
- Motor oil
- Auto parts
- Roadside assistance
How Do Fuel Cards Work?
So, how do fuel cards work? A fuel card works in the same way as a debit or credit card: Once you arrive at a gas station, you can either swipe it at the pump or meander inside and use it to pay in person. Powered by the same technology as debit and credit cards, fuel cards can make filling up a cinch by expediting the entire process.
You may be asking, then why wouldn’t a driver simply use a debit or credit card? Why carry an extra card in my wallet?
In short, because of the discounts and benefits a fuel card can offer, which can be huge, even substantial perks if you take into account the fluctuating cost of fuel. These cards work in much the same way that retailer-specific cards do, enabling you to accrue spending points, earn cash back, track your spending at that retailer, and gain access to special discounts. However, fuel cards are used specifically for transportation costs.
This helps streamline operations and saves drivers from having to hold onto receipts for the long haul, all while saving money and reaping the rewards the particular fuel card offers.
What is a Secured Fuel Card?
A secured fuel card operates under the same concept as a secured credit card. Generally, secured fuel cards:
- Require a deposit, which functions as your deposit, collateral, and typically, your line of credit.
- Are paid monthly—either the entirety of the balance or a portion of it.
What are the Benefits of a Secured Fuel Card?
There are several pros to using a secured fuel card, namely:
- Discounts – Secured fuel cards typically come with significant perks, such as cash back at the pump. These savings can range from a few cents off to 50- cents off or more per gallon, depending on the card you use. For long-haul drivers, this adds up considerably.
- Security – While any type of card is vulnerable to security issues—which we’ll dive into next—secured cards may offer greater security than carrying around cash. Further, you have the ability to decide who can use the card, as well as the card’s purposes.
- Financial tracking – A secured fuel card, as well as a prepaid fuel card, can help you track and manage spending. Some secured fuel cards, for instance, may alert you whenever a purchase is made, which can help you stay on top of your overall finances. Not to mention, every amount is accounted for, which can help eradicate discrepancies.
- Credit cultivation – A secured card can help you build credit, particularly if the balance is paid off every month and/or you keep your utilization rate low.
What are the Drawbacks of a Secured Fuel Card?
Secured fuel cards, like credit cards, debit cards, and prepaid cards, may be susceptible to:
- Fuel card fraud
- Unauthorized use
However, most companies that offer secured fuel cards also offer protection to their customers should any of these unfortunate things happen.
Secured cards are also notorious for “arriving with” a host of fees, many of which can be concealed in the fine print. In other words, be sure you understand precisely what you’re getting into before committing to a secured fuel card.
Furthermore, a secured card’s line of credit is, as we covered, usually restricted to the amount equal to the deposit you put down as security. This can present challenges if you’re facing a shortage of funds—when, say, you’re experiencing a lull between seasons.
What is a Prepaid Fuel Card?
How do prepaid gas cards work? A prepaid fuel card is essentially exactly as it sounds: It’s a card that has been paid for in advance of use. In this sense, it functions the same way as a reloadable gift card does.
Here’s how it works:
- You load a prepaid fuel card with a set amount.
- Every purchase you make is deducted from this amount, along with fees and other expenses.
Prepaid fuel cards do not operate as a line of credit. This means once the money has been spent, the card is dust—unless or until you reload it with funds.
What are the Benefits of a Prepaid Fuel Card?
To better understand the differences between each type of fuel card, let’s have a look at the pros of using a prepaid fuel card:
- Convenience – There are few things more convenient for a driver than the ability to pull up to a gas pump and fill up, particularly if it’s the middle of the night and only the pumps are open (i.e. there’s no viable way to pay with cash). In fact, data shows that 80% of consumers prefer paying with a card over cash 2.
- Zero interest – Because the card is prepaid and you’re limited to using the amount that’s on it, you don’t have to pay an interest fee on outstanding balances.
- Budget control – A prepaid card can help you stay within your transportation and freighting budget by its very nature. This can help you control your spending in general.
- Accessibility – Unlike many secured fuel cards, you do not have to submit an application and await approval to receive a prepaid card. This can be helpful for companies that are just starting out and have yet to build credit, or for those who have poor credit.
What are the Drawbacks of a Prepaid Fuel Card?
The cons of a prepaid fuel card ought to be considered as you make a decision between a prepaid vs secured fuel card. While the cons will ultimately depend on the specific fuel card company you choose to go with, some of the disadvantages may include:
- Lack of credit-building capabilities – Prepaid cards do not help you build credit if that’s an aim for you and your company. As we mentioned earlier, prepaid fuel cards are similar in concept to gift cards, meaning your expenditures and reloads are not reported to credit bureaus such as Experian, Equifax, and Transunion. (That said, prepaid cards also don’t have a negative impact on your credit.)
- Zero line of credit – Because a prepaid fuel card supplies funds only in the amount that has been prepaid, they offer zero help if you and your business are in a pinch—for instance, if funds have run low because a client is late on a payment.
Secured vs Prepaid Gas Cards: How to Choose?
Still unsure which type of fuel card you should choose? Ultimately, the best card for you and your company will depend on your needs, budget, and goals.
- If you’re a new company looking to build credit, consider a secured fuel card which will allow you to build credit like a traditional credit card.
- If you’re less focused on building credit and more focused on sticking to a budget, consider a prepaid fuel card which will allow you to dictate exactly how much money you’re putting toward vehicle and transportation expenses.
- If you operate a fairly large company and don’t want to worry about having to reload your driver's fuel cards, consider a secured fuel card that operates under a line of credit.
What About a “Closed-Loop” Gas Card?
When looking into various types of gas cards, you may come across what’s known as a “closed-loop” gas card. Simply put, a “closed-loop” business gas card is a fuel card that’s accessible only at specific companies, such as Exxon, Shell, and Chevron.
While they offer discounts at their stations and stores, they also come with extremely high interest rates. For example, according to Bankrate, the Exxon Smart Card offers users 6 cents back per gallon, but it also has an APR of 26.49% for any outstanding balances 3.
Go With a Fuel Card That Keeps on Giving With AtoB
Whether you opt for secured or prepaid, using a fuel card can be a valuable, efficient method for saving on fuel costs, tracking expenses, and earning discounts.
And AtoB offers these benefits to its customers in spades. Ranked as one of the top fuel cards by FreightWaves Ratings, our fuel cards provide superb discounts on fuel (as in up to 25 cents off per gallon), tremendous security with SMS Unlock and telematics, and a knowledgeable customer service team to assist you with any concerns or questions 4. Our cards can also be used to make vehicle-related purchases at any location where VISA is accepted, so you don’t have to pause on your route—or go out of your way—to locate an AtoB-specific station.
Explore the advantages of AtoB today and contact our team today so that you and your drivers can worry less about finances and locations, and keep your eyes fixed firmly on the journey ahead.
1 Experian. Secured vs prepaid cards: what’s the difference?
2 Fundera Ledger. Cash vs credit card spending statistics (2021).
3 Bankrate. Best credit cards for bad credit.
4 FreightWaves Ratings. What is a fuel card & how does it work?