Why Fuel Cards are More Beneficial to the Fleets than Credit Cards?
You might be looking for ways to lower your fuel costs now that the fuel price fluctuation is beginning to start again. Have you considered using fuel cards instead of a fleet credit card or paying cash for fuel for your truckers? While they might look similar to credit cards, using a credit card for fleet utilization isn’t always the most advantageous option. There are several benefits that fuel cards offer that you might not be receiving if you’ve been utilizing a fleet credit card for fuel advantages.
Despite falling diesel prices, fuel remains one of the most expensive operating costs for carriers. Your company will be more lucrative the better you can manage that expense. Using a fuel card rather than a company credit card or liquid assets for diesel purchases is one of the simplest ways to control fuel costs.
We will go through the basics of fuel and credit cards, followed by their advantages in this blog.
What Is A Fuel Card?
A fuel card, similar to a credit card, makes it simple to pay for and track your corporate fuel transactions. It also links to an account like a credit card. The fuel’s price is billed to your account when you fill up by merely swiping your card. Payments may reflect in your bank or credit card account. You don’t need to maintain and add up fuel invoices because every purchase is tracked and itemized on a single tax statement.
The only significant distinction in using a fuel card is that it necessitates accessing the driver’s unique PIN and the vehicle’s mileage. Behind the scenes, however, there are several other significant differences.
For any purchase, there are corporate credit cards. In contrast, a fuel card is specifically for purchasing fuel and upkeep for company property.
How Do Fuel Cards Work?
A private payment network of gas stations is the foundation of a fuel card. It is only functional at gas stations connected to this system. However, the optimum fuel cards will encompass the bulk of gas stations in the United States (95 percent or more).
The gas purchase information is available online as soon as the driver buys it. The company can access this information, prepare reports, and maintain cards anytime through a web portal. Drivers can manage their cards via a mobile app.
In contrast to conventional fuel payment methods, a fuel card has some significant advantages.
How Do You Use A Fuel Card?
Utilizing fuel cards is very effortless. To put it simply, instead of using personal cash or a company credit card to pay for the fuel at a gas station, the employee uses a fuel card. The bill is then charged directly to the company.
It’s worth noting that most fuel cards are only legitimate inside a single network. For instance, the Shell Multi-Network Fuel Card works at gas stations operated by Shell, Esso, Texaco, Gulf, and Gleaner. To fill up at a supermarket petrol station, however, you must have a legitimate fuel card at Morrisons or Tesco, such as the FuelPlus Fuel Card.
Advantages Of A Fuel Card
Fuel cards, like cash and credit cards, are adaptable. They may even provide discounts on all of your company’s fuel purchases! With a dependable fuel card, you will also be able to solve some of the biggest problems with conventional fuel payments. Here are some of the advantages of fuel cards:
- Efficient monitoring of fuel cards – By using fuel cards, you can gather specific information about your fleet’s fuel consumption. Many fuel card providers can compile this data into several reports that make controlling your company’s fuel efficiency convenient. You can also track fuel usage using card management software- typically available as a digital dashboard or application. Fleet managers can then identify trends and find ways to improve spending and fuel economy.
- Security – Fuel cards can be independently delegated to a driver or car and given a different ID/PIN- to reduce security risks. Every operator will have safe entry to the account and be able to instantly freeze or revoke cards if they are stolen or lost and reactivate or order new cards as required.
- No Credit – Your fuel card can be pre-loaded with a predetermined number of liters using a pre-pay fuel account. Check with your fuel card supplier for a Flexi-pay card. The Flexi-pay solution gives you access to a resolved, industrially related diesel price while keeping you in complete command of the card’s spending limits.
- Simple To Limit Spending – You can choose to limit transactions to just fuel with the majority of fuel cards. The invoice won’t have to be divided or dissolved, which will be advantageous for your account department. Furthermore, you can be confident that your drivers aren’t paying for personal costs with company money.
- Discounts And Rebates On Fuel – Since the companies that issue fuel cards impact the price per liter for their clients, those who own fuel cards receive fuel discounts that add up in the long run. Oil systems recognize fuel card providers because they buy large quantities of fuel. Because of this, some fuel card companies can offer customers a more desirable rate.
What Is A Credit Card?
With a credit card, a customer can borrow up to his pre-approved credit limit. Credit cards are a form of credit facility offered by banks. It allows consumers to make purchases of goods and services. As well as income and credit score, the credit card issuer determines the credit limit based on those variables. Credit card information includes the card number, recipient’s name, expiry date, signature, CVC code, etc. Credit cards have the advantage of not being linked to a bank account. As a result, every time you use your credit card, the sum is subtracted from your credit card balance instead of your bank account.
How Do Credit Cards Work?
A credit card is primarily a small loan from the bank, to put it simply. While some may consider credit cards to be “easy money,” your credit balance is a loan with an APR (also defined as interest) that will be billed to you as the account holder if you do not pay off your balance at the end of a billing period. Upon approval of your credit card application, the bank will add a credit limit to your account. The credit limit represents the most the bank will permit you to splurge using the card. The credit limit of your credit card is affected by several factors, such as your revenue, liabilities, and credit score.
Credit card transactions deduct your available balance from your account. In contrast, making a credit card payment will give you more accessible credit for future orders.
How Do You Use A Credit Card?
Credit cards are simple to operate. You may have to insert your card into a reader or swipe it at the cash register when you enter a shop. You can also use your card to make non-contact payments in stores. Using your credit card when shopping online is as simple as filling in your card details, which include:
- Your credit card number.
- The date of expiration.
- The CVV security code – is usually printed on the back of your card.
It’s also critical to utilize your credit card in ways that will assist you in improving your credit score while not costing you too much in terms of interest and fees.
Advantages Of Credit Cards
With its simplicity and convenient pay-back options, credit cards have become an essential part of life. Credit card discount offers and transactions are unmatched by any other financial instrument. However, credit cards become debt traps if wrongly utilized or if you charge more than you can afford to pay back when the bill arrives. If you’re new to the concept of credit, here are five advantages:
- Easy Credit Access – The most significant benefit of a credit card is the ease with which you can obtain credit. Credit cards operate based on delayed payment, which means you can use your card today and pay for your transactions later. Your bank balance doesn’t deplete every time you swipe because the money used does not leave your account.
- Establishing A Credit Line – You can create a line of credit with credit cards. A credit line is critical because it permits banks to observe your active credit record based on card repayments and consumption. Credit cards are used by banking institutions to assess the creditworthiness of potential loan applicants and will be an integral part of the future loan or rental applications.
- EMI Provision – If you want to make a large purchase but don’t want to use your savings, you can put it on your credit card to defer payment. In addition, you can choose to pay off your purchase in equal monthly installments, avoiding paying a lump sum and depleting your bank account. Using EMI to pay for a transaction, such as a television or an expensive refrigerator, is cheaper than taking out a personal loan.
- Offers And Discounts – Incentives and offers to use your credit card are typically abundant with most cards. These can range from cash back to rewards points accumulated each time you swipe your card, which can then be repaid as air miles or used to pay off your exceptional card balance. Additionally, lenders provide savings on credit card purchases made on things like plane tickets, vacations, and large transactions, which can help you save money.
- Flexible Credit – When using a credit card, you may have access to an interest-free period during which no interest is applicable to any impressive balance. You can get free, short-term credit for 45-60 days if you pay off the entire amount due by the due date on your credit card bill. As a result, you can benefit from a credit advance while avoiding the fees involved by having an established credit balance.
Why Do Fleets Need A Fuel Card Instead Of Credit Card?
Even with all the advantages, credit cards are not the most suitable option for fleet managers and drivers. Unlike credit cards, fuel cards offer a wide range of benefits specifically catering to fleets’ needs of controlling fuel expenses. Here are the benefits that fuel cards offer over credit cards:
- Controlled Spending – With the help of fuel cards, you can decide to control your transactions. Your invoices will neither be divided nor dissolved. However, with credit cards, there is no limit to spending as they offer you credit to a huge extent. You are likely to fall into the debt trap by overspending.
- Drivers Do Not Need To Pay – Additionally, fuel cards give drivers more comfort. Drivers are not required to pay for fuel out of their wallets, manage receipts, or request compensation. Furthermore, not having to carry cash can make drivers feel more stable.
- IFTA Calculation – A fuel card provides much more information than a credit card, including the transaction price, owner name, date, and time of each payment. When a driver swipes the card, he or she will be urged to enter additional information such as meter readings and a driver ID (PIN). Access to fleet consumption data, receipts, and fuel costs will reduce your accounting and bookkeeping costs while also saving you time when submitting IFTA taxes.
- Special Fuel Discounts – More than 90% of the country’s gas stations accept fuel cards. Most of them offer aggressive discounts and cashback plans, such as 2 to 20 cents off per gallon. In addition, many fuel cards have cheap to no transaction fees.
- Fraud Protection – The best route to buy fuel is with a fuel card. At the point of sale, fuel cards use an operator ID/PIN, giving consumers additional security. Account information is only accessible to fleet executives, who can disable lost or stolen cards instantly.
- Avoid Unauthorized Fuel Transactions – You can also restrict the number of charges per day, the routine purchase quantity, and even the quantity of gallons the driver can purchase per payment to prevent fuel card fraud daily. Try to obtain a fuel card that restricts the driver to only using a particular fuel, such as diesel.
We hope that this blog has enriched your knowledge on fuel cards and credit cards along with understanding why fuel cards can be more advantageous for you while purchasing fuel. A wise decision cannot only help you save money on fuel but also provide you with several other benefits.