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Fuel cards

Managing a transportation company? See if you can make your expenses more manageable with fuel cards.

If you’re running a fleet of vehicles, you’ll find yourself with dozens of drivers who need to fill up daily and expense their purchases.

Fuel cards can help stop fuel from becoming an admin nightmare. Let’s look at how they work.

What are fuel cards?

Fuel cards are very similar to business credit cards, but they can only be used to purchase petrol and related goods – so they’re mostly for businesses that are in the transportation industry in one way or another.

The idea is that when you own a business that possesses, say, a fleet of 20 or 30 trucks that travel across the UK all the time, you need to find an efficient way for drivers to pay for petrol and expense it. A fuel card allows you to do that without giving each driver a full credit card and potentially opening a can of worms because of misuse.

How do fuel cards work?

Fuel card providers have a partnership with different networks of petrol stations across the UK – meaning each of them will offer a somewhat limited choice of petrol stations you can use them at. Keep that into account when picking your fuel card, or your drivers may end up having to make a detour just to fill up.

As far as credit goes, in most cases fuel cards are more like charge cards than credit cards. They’ll have an interest-free period, at the end of which you’ll be billed and asked to pay off your debt in full. You can’t accumulate a balance with a fuel card, which is why you won’t see any rate advertised on providers’ websites; they simply don’t accrue any interests at all.

However, you may also come across prepaid fuel cards. In that case, you need to deposit money on the card before using it, and you’ll only be able to spend as much as you’ve deposited.

Are fuel cards a good idea?

If you have a fleet of vehicles to manage, fuel cards undoubtedly come with a series of appealing benefits:

  • Discounts or fixed prices on fuel. Even a small discount can make a difference when you have a big fleet to manage and you’re spending thousands of pounds a month on fuel. Some cards will offer fixed weekly prices regardless of the price displayed at the station.
  • VAT-friendly billing. So that you don’t have to rely on drivers collecting receipts.
  • Control over what your driver can spend money on. It’s usually petrol and a bunch of related services, such as garage repairs. Some cards also allow you to set individual spending limits.
  • Useful data on your petrol spending and usage. Many cards will gather data on how much you’re spending on fuel, compare it to your business’s mileage count and give you back a series of useful data and reports you can use to try and make your company more cost-efficient.

Why choose a fuel card over a regular credit card?

There is no unique answer as to which of the two options is better – it depends on what your business looks like. Here are a few things you may want to think about before making a choice:

  • Fuel usage. Fuel cards aren’t for companies that have a couple of vans they use once a week to go across town. Some of them set a minimum usage and others charge a monthly fee that makes them uneconomical if you don’t use them enough. Your drivers need to be making lots of miles to make them worth it.
  • Your business’s dimension and structure. If you have a really small business and you and your family members are the ones habitually driving your vehicles, again, it may not be worth it. One of the big advantages of a fuel card is control over what your employees spend money on – so you kind of need to have a certain number of different employees and vehicles.
  • Discounts and benefits. They vary across the market, but if you’re in the transportation industry, fuel cards’ benefits and discounts are likely to be more appealing to you than those offered by a regular business credit card, because they’ll be more suitable to your business. Apart from a discount on fuel, you can for example expect discounts on repairs or road assistance if a vehicle breaks down.
  • Your credit needs. Fuel card providers will advertise their products saying that, unlike credit cards, fuel cards don’t charge any interest. That’s certainly true, but on the other hand, you always need to pay your bill on time, even if your business’s cashflow isn’t looking great that month. If you are looking for a little extra flexibility, a credit card may be a better bet; keep in mind that some offer month-long interest-free introductory periods on purchases.

How to compare fuel cards

Comparing fuel cards isn’t the easiest job because providers won’t disclose all the details of what they offer on their websites. So, it’s a good idea to narrow down your search to three or four cards that you think may work for you and then get in touch with them, asking for a bespoke offer. In order to compare different deals, try looking at:

  • Where the card can be used. Is it a satisfactory number of petrol stations? Are they available on the routes your drivers usually take? Can you use the card at supermarkets’ petrol stations?
  • Discounts. How much can you save on fuel in a month or in a year?
  • Extra benefits. What else do you get with your fuel card? Some also earn you Nectar points or Tesco points, opening up a whole world of extra rewards.
  • Annual fee. If there is one, is it worth the benefits you’re getting in return for it? Try and do the maths to figure out how much fuel you need to purchase in a year to start saving money.
  • Minimum usage. Some cards set a pretty high minimum spend, so they may be unfit for small businesses, and others charge a higher annual fee if you have a relatively small fleet of vehicles.
  • Interest-free periods. Some cards will bill you weekly, others will offer one-month-long (or more) billing cycles. In most cases, it’ll also depend on your business’s credit score, so it’s one of those things you may need to get in touch with the company first to find out.
  • Control features. Can you set different spending limits on each card? Can the card also be used in supermarkets if you decide so?
  • Type of fleet. Many cards target specific types of fleets – trucks, vans or buses. Make sure you look at a fuel card that matches your needs.

Pros and cons

Pros

  • Discount on fuel prices
  • More control over how much money your drivers spend and on what
  • Industry-related benefits and rewards
  • Useful data and insights on your fuel spending patterns
  • It’s easier to keep the bills in order for accounting and tax purposes
  • No interest charged

Cons

  • Can only purchase fuel and related goods
  • You must pay your bill in full every month
  • More convenient if your business purchases loads of fuel; sometimes it’s not worth it if you have a small business

Alternative options

Fuel cards offer quite a specific service, so if you have the same set of issues but are looking for something a bit more flexible, you can consider the following:

  • A business credit card. As we said, it’s more easily misused, but if you aren’t running a big fleet it can be a more flexible solution and you may be able to secure better credit terms or some juicy rewards. It’s also a good idea if your drivers are often out for the night (perhaps abroad) and need to pay for food or accommodation.
  • An expense management tool. These days, there is a lot of smart software out there that can streamline your expense admin and make it smoother. Some, like Soldo, even offer a spending account and employee cards.

Frequently asked questions

*Disclaimer: The offers compared on this page are chosen from a range of products whose details Finder has access to track; they don't represent all the products available in the market. Unless indicated otherwise, products are displayed in no particular order or ranking. The terms "best", "top", "cheap" (and variations) are not product ratings and are subject to our terms of use. You should consider seeking independent financial advice and consider your personal financial circumstances when comparing products.

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