We all know the old saying, “If it aint broke, don’t fix it.” Well, everyone except BP, which appears to have gotten this idiom backwards because they seem unable to stop breaking good things. First the Gulf of Mexico and now the BP Credit Card, which used to be one of the very best gas credit cards before changes to the offer effective March 3 turned it into one of the worst.
Of course, BP should not be alone in shouldering the blame, as Chase – the issuer of this once-great co-branded credit card – is also complicit in its downfall. Regardless of who exactly is to blame, what is now abundantly clear is that BP is losing a significant strategic advantage over its competition. The credit card bearing its name is no longer a draw, but is instead an example of everything that is wrong with corporate rewards programs.
You see, the popularity of the BP Credit Card centered on two things: 1) its lucrative rewards structure and 2) its simplicity. It offered 10% cash back on BP gas, 4% on travel and dining, and 2% on everything else for the first 60 days after account opening. Thereafter, it gave cardholders 5% cash back on BP gas, 2% on travel and dining, and 1% on everything else.
In contrast, the re-branded BP Visa with Pump Rewards is characterized by a middling rewards structure and a whole lot of confusion. It offers 15 cent-per-gallon rebates for every $100 you spend on BP gas and 5 cent-per-gallon rebates for every $100 you spend on everything else – with an accompanying asterisk that states you cannot earn rewards at competing gas stations. There are, of course, other conditions that apply to this offer as well, namely the fact that the rebates you earn only apply to a single fill up and, of that, only the first 20 gallons.
If you’re confused as to what exactly this all means, you certainly aren’t alone, which is why the New BP Credit Card’s rewards program merits a closer look.
Inside the New BP Rewards Program
It appears that the new BP Credit Card can save consumers up to $3 for every $100 they spend on BP gas ($0.15 x the maximum 20 gallons) and up to $1 for every $100 spent on everything else ($0.05 x the maximum 20 gallons). However, perhaps the simplest way to comprehend this new rewards structure is to view it through the prism of a practical example. So, let’s say you spend around $200 on BP gas per month, $200 on travel and dining, and $400 on other everyday expenses.
With the old BP Credit Card, you would have gotten $10 cash back on your gas, $4 on travel and dining, and $4 on everything else – a grand total of $18 a month in free money. With the New BP Visa, you would get a 30 cent-per-gallon rebate from your gas expenses and a 30 cent-per gallon rebate from your other purchases. Since you can only use your rebates on a single fill up and they only apply to a maximum of 20 gallons, you’d be saving at most $12 per month.
The changes would therefore cost you 33% of your monthly rewards earnings. That would add up to $72 lost over the course of a year, but since a lot of people’s gas tanks do not hold 20 gallons, it would likely be more.
Decoding the Language
It’s common for credit card issuers to structure their rewards programs in a manner that makes direct comparison to other cards difficult. They are able to mask uncompetitive offers behind different rewards currencies (i.e. points, miles and cash back), rewards earning limits, tiered rewards programs (i.e. those that give different rates, depending on your spending), and language that makes it difficult to determine how rewarding their rewards will actually be.
It’s clear that Chase and BP have utilized this strategy, for a couple different reasons:
- Redemption limits: Saying that rewards only apply to one fill up, up to 20 gallons ensures that BP can advertise better earning rates than what most cardholders will actually get.
- Convoluted terminology: The language used in the new BP Credit Card’s advertising is simply laughable. While unclear across the board, our favorite part relates to rewards redemption via statement credit. At first glance, do you have any idea what this means: “Get a $15 statement credit for every $1 you earn in cents per gallon rebates.” Probably not, as the juxtaposition of different denominations is enough to throw anyone off. To clear things up, you don’t get a $15 statement credit for every $1 you spend. Rather, you’d have to spend at least $700 and as much as $2,000.
Ultimately, the New BP Visa with Pump Rewards is nothing but a cheap, confusing imitation of its predecessor. It is no longer a go-to gas credit card, and the timing of this change couldn’t have been worse, at least for Chase and BP. After all, it coincides with an improving generic gas rewards credit card market, highlighted by the Pentagon Federal Credit Union Platinum Cash Back Credit Card, which gives you 5% cash back on gas purchased at any station.
[Disclosure: Some of the links within this article point to CardHub.com, which is owned by the same parent company as Wallet Blog.]