Fuel cards: how do they work and are they right for you?

Find out if fuel cards could make it easier and cheaper to keep your business moving.

Does your business rely on a fleet of vehicles? Fuel cards are an easy alternative to reimbursing your drivers for fuel expenses, and they could save you money, too. Here’s how they work.

What are fuel cards?

Fuel cards are a bit like business credit cards, but they can only be used to pay for business fuel and other driving-related expenses (such as vehicle repairs).

If your business owns, say, 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 to the company. A fuel card allows you to do that, saving you time on admin, without the risks involved in giving each driver a full credit card.

How do fuel cards work?

Most fuel cards are more like charge cards than credit cards: at the end of each billing cycle you’ll have to pay off your debt in full. You can’t carry a balance with a fuel card, which means you don’t pay any interest; so you won’t see any rates advertised on providers’ websites when you’re comparing cards.

You may also come across prepaid fuel cards, which work as the name suggests: you need to deposit money on the card before using it, and you drivers will only be able to spend as much as you’ve deposited.

Different fuel card providers partner with different networks of fuel stations across the UK, so you can’t necessarily use any fuel card at every petrol station: you’ll have to choose the one that offers the best choice of fuel sites for your business.

Pros and cons

Pros

  • Could make your fuel cheaper, thanks to discounts or fixed fuel prices
  • More control over how much money your drivers spend and on what
  • Industry-related benefits and rewards
  • Insights into your fuel spending and how to cut costs
  • VAT-friendly billing. No need to rely on drivers collecting receipts: the fuel card provider will issue you with HMRC-compliant invoices
  • Zero interest

Cons

  • No flexibility in how you use the card
  • Have to pay in full every month

Alternatives to fuel cards

Not sure whether you need a fuel card for your business? Here are some other options you could consider:

Business credit cards.

These are more flexible, in that you can use them for any business expenditure and spread the cost if you need to, and may offer perks and rewards that fuel cards don’t.

Giving your employees a credit card does run the risk that the card will be used in ways you weren’t intending, but it could be a good idea if your drivers are often out for the night (perhaps abroad) and need to pay for food or accommodation. What’s more, with some business credit cards you can set individual spending limits for each cardholder.

Business credit cards

Expense management tools

If the main reason you’re considering a fuel card is to streamline your expense admin, you could invest in some software to do that for you. Some tools, like Soldo, even offer a spending account and prepaid cards for your employees.

Prepaid business cards

Prepaid business cards can offer effective budgeting and expense tracking. They are suitable for cost control, budget allocation and employee spending management as cardholders can only spend the money that has been loaded onto the card.

Prepaid business cards

Should I choose a fuel card or a regular credit card?

We can’t answer that for you, but here are some questions to ask yourself to help you decide:

  • How much fuel do you use? If you just have a couple of vans that go across town a couple of times a week, a fuel card is unlikely to be right for you. This is because some fuel cards set a minimum usage, and others charge a monthly fee, so they’re likely to be uneconomical if you don’t use them enough.
  • How many employees and vehicles do you have? If it’s a small business and your drivers are all family members, controlling your employees’ spending might not matter so much to you.
  • What sort of extras would benefit you? One of the key benefits of fuel cards is that some offer discounts on repairs or road assistance if a vehicle breaks down. Business credit cards, on the other hand, might offer air miles or reward points. The best option for you will depend on the nature and needs of your business.
  • Do you need credit? Fuel cards don’t charge any interest, but you’ll always have to pay your bill on time, even if your business is having a temporary cash flow problem. If you’re 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.

What’s the best fuel card?

It’s not as easy to compare fuel cards as it is with some other financial products, because fuel card providers don’t disclose all the details of what they offer on their websites. We suggest narrowing down your search to 3 or 4 cards that you think may work for you, and then contacting the provider to ask for a bespoke offer. Here are some of the things you should consider when you’re refining your options:

  • Where can you use the card? 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?
  • What discount does it offer? How much can you save on fuel costs in a month or in a year?
  • What extra benefits can you get? Look for money off repairs or roadside assistance. Some fuel cards can also earn you Nectar points or Clubcard points, opening up a whole world of extra rewards.
  • Is there an annual fee? Is it worth the benefits you’d get in return? Do the maths: how much fuel would you need to buy in a year to start saving money?
  • Is there a minimum spend? Some cards set their minimum usage pretty high, and others charge a higher annual fee if you have a relatively small fleet of vehicles, so these might not be the best for small businesses.
  • How long are the interest-free periods? Some cards will bill you weekly; others offer billing cycles of a month or more. (This is likely to depend on your business’s credit score, so it may be something to ask about when you get in touch with the card provider.)
  • How much control do you have over the card? Can you set different spending limits for each user? Can the card also be used in supermarkets if you decide to allow this?
  • What type of vehicle is it best for? Many cards specifically target trucks, vans or buses, for example.

Frequently asked questions

We show offers we can track - that's not every product on the market...yet. Unless we've said otherwise, products are in no particular order. The terms "best", "top", "cheap" (and variations of these) aren't ratings, though we always explain what's great about a product when we highlight it. This is subject to our terms of use. When you make major financial decisions, consider getting independent financial advice. Always consider your own circumstances when you compare products so you get what's right for you. Most of the data in Finder's comparison tables has the source: Moneyfacts Group PLC. In other cases, Finder has sourced data directly from providers.

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