Soaring gas prices convinced me to switch over to Costco's credit card

When the US and Israel launched the war with Iran and sent the oil market into a frenzy, I figured it would be fair to assume gas prices wouldn’t be coming down anytime soon.

I’ve since become sufficiently convinced of this that I decided to completely shake up the cards in my wallet in recent weeks.

According to AAA, the US average gas price is now around $4.15 per gallon, up more than $0.60 from last month and up nearly $1 from a year ago. That’s no small change.

Gas prices tend to be somewhat lower where I live in Wisconsin compared to the national average, but it has been pretty clear to me that an extended stretch of $4 gas was a strong possibility.

As Business Insider’s retail reporter, I’m well aware of the discounts that wholesale clubs and other loyalty programs offer on gas. I did the math and found that Costco’s gas pricing can more than offset the membership fee.

After that analysis, I got a bit fixated on proactively getting gas from Costco rather than whatever station happened to be closest when my tank was running low.

Prices also began to rise sharply, making the membership advantage clearer. Costco chief financial officer Gary Millerchip seemed to be reading my mind on the company’s earnings call last month.

“When prices are higher, that will tend to cause members to maybe take the extra mile that it might be involved to get to the gas station because of the incremental value they see there,” he said.

Touche, Millerchip.

Still, I knew I was leaving money on the proverbial table.

The thing is, I was already using one of the best fuel and grocery rewards credit cards out there — the Blue Cash Preferred from American Express — but Costco famously (and frustratingly) does not accept AmEx.

That meant I had to pick between Costco’s prices and AmEx’s rewards. I was also using the Chase Sapphire card for rewards in other categories, like dining and travel.

I had considered the Costco Anywhere card before, but dismissed it since it didn’t seem much better than what I already had in my wallet, based on reviews I read from my Business Insider colleagues, NerdWallet, and several finance-focused Reddit communities.

Prolonged high gas prices change the math on rewards

What changed my mind was the prospect that gas could spiral toward $5, making the Costco card’s 5% reward on gas worth more than $0.20 per gallon, which is typically priced $0.20 or more below the traditional retail market. That would work out to a combined savings of about 10% by my math.

I don’t drive a lot of miles, but I also don’t like to pay more than I have to for gas. Plus, the other rewards categories were reasonably similar to those on my other cards, so I decided to consolidate my spending from the two cards onto the Costco card alone.

(I also like the idea of paying fewer annual membership fees, though the rewards from the Blue Cash and the Sapphire more than paid for themselves. We’ll have to see how this year’s fee and rewards math ends up comparing to last year.)

This isn’t intended to be a Costco-only hype session. Walmart-owned Sam’s Club offers low-priced gas and a credit card with a rewards structure very similar to Costco’s, but Sam’s doesn’t have any clubs near me.

In addition, Walmart’s Plus membership offers a $0.10 per gallon discount at thousands of stations across the US, and several major gas brands and grocery chains have their own loyalty programs that could be worth exploring based on your personal needs and habits.

The larger point is that gas rewards didn’t really grab my attention back when prices were relatively low and steady. Now that things are more uncertain, they’re worth a second look.