Monday, August 15, 2022

How credit cards are getting in on the electric vehicle spending trend

Electric vehicles have a ways to go before they’re as ubiquitous as their gas-powered counterparts. EVs made up a mere 2% of new US car sales in 2020, according to the International Energy Agency’s 2021 Global EV Outlook.

But thanks to financial incentives for buyers, as well as automaker investments and government funding for electric-vehicle infrastructure, things could look very different within a few years. And if credit card companies want to get in on the ground floor of a spending trend, they need to act before there’s an EV in every driveway.

Among major issuers, US Bank USB,
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has already dipped its toes in, announcing in January 2022 that its cards that earn bonus rewards on gas purchases will also earn that same rate on purchases at EV charging stations.

“We are proactively adding this reward to the US Bank consumer and business card portfolios that reward for gas because we know many people are either in the process of purchasing an EV or considering an EV purchase in the future,” said Steve Mattics, head of US Bank Retail Payment Solutions, in an email.

Several new, smaller players in the credit card space are also debuting rewards for EV charging. Here are some reasons why this trend is likely to accelerate.

See: With more choices available, electric vehicles sales are booming

EV charging became a distinct purchasing category

Bonus rewards for EV charging became technically possible a few years ago when the Visa and Mastercard payment networks added EV charging as a distinct merchant category code or MCC. Because credit card issuers use MCCs when deciding which purchases are eligible for extra points, this paved the way for EV charging as its own bonus category.

Of course, the MCC assigned to different EV charging stations may vary. Note that your credit card may classify EV charging as another kind of purchase.

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EV investment is speeding up

Car companies are setting ambitious goals to dramatically change their vehicle offerings in the near future. This involves not just designing new electric cars, but also developing batteries and building factories.

“If you follow the money, the money’s being invested in EV,” says Brent Gruber, senior director of global automotive at JD Power.

But if you can’t charge an EV at home and don’t have convenient access to public charging stalls, you’re not going to buy an EV. Some automakers are working to alleviate this problem.

General Motors Co., GM,
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for instance, is partnering with EV charging network EVgo EVGO,
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to build thousands more fast-charging stations by the end of 2025. The federal government is also providing funding for an EV charging network through a bipartisan infrastructure law, which passed in November 2021. It allocates $5 billion to states to build a national EV charging network and $2.5 billion to increase EV charging access in rural and disadvantaged communities.

Also read: What is EV, BEV, HEV, PHEV? Here’s your guide to types of electric cars

EV buyers may get financial incentives

Depending on where you live, you may be eligible for rebates and tax credits when you buy or lease an EV. The amount you could save depends on the program in your state or county, and there may be other limitations to keep in mind, including the price of the car and your household income.

Some local governments or utility companies also provide rebates or reduced electricity costs if you install an eligible home EV charger.

According to Gruber, tax credits can incentivize consumer behavior, resulting in a steeper rise in EV sales in the US, especially as more consumers have access to charging facilities in the next few years.

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Cards that offer EV charging rewards

Aside from US Bank cards, there’s a wave of wait-listed products from smaller companies — such as PointCard Titan, FutureCard and a Bluedot debit card — that offer or plan to offer bonus rewards on EV charging. There are also new cards offering other eco-friendly benefits.

As for whether these kinds of cards are the right fit for you? That will likely depend on a variety of factors, including how often you use EV charging stations.

But keep in mind that if EV charging does (or might soon) represent a big part of your budget, you could also opt for a more general rewards credit card that earns a higher flat rate on everything you buy, EV charging included.

Credit cards that reward different ways to get around

Even before EV charging came onto the rewards scene, ground transport-related credit card rewards had been expanding beyond gas station purchases or, in the case of travel cards, rental car bookings.

But consumers who don’t drive often (or ever) still spend money on other forms of transportation. And select cards from major issuers — like American Express, AXP,
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Citi C,
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and others — have been adding new ways to earn rewards on specific “transit” expenses, like buses, ferries, subways, taxis and more.

Read next: New and useful features to look for if you want a better credit card

Also of note: Even if “transit” isn’t specifically or conspicuously promoted as a bonus category for your card, it doesn’t necessarily mean that your card can’t help with your commute. Many cards, whatever they may earn rewards on, offer the ability to redeem those rewards for travel or transit expenses like trains, buses or cabs.

More From NerdWallet

Sara Rathner writes for NerdWallet. Email: srathner@nerdwallet.com. Twitter: @sarakrathner.

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