I’ve been using this trick to save about $100 a month for a few years now…thought I’d share the tip with my readers. I know Kroger isn’t national, but they are plentiful here in Texas, and they have been running a lucrative fuel promotion for about 2 years now. It is more or less matched by other stores, including Randalls, but Kroger is more convenient for me, so that’s who I use.

It works like this… For every dollar you spend, you get a point…which can be redeemed for gasoline discounts. If you spend $100 on food, you are eligible for $0.10 off up too 35 gallons of fuel. Who cares you may be thinking…that’s a lot of trouble to save $3.50, plus, Kroger’s prices are probably 10%-20% higher than HEB and Wal-Mart….the math just doesn’t work out.

$3.50 may not be worth your time, but what about the $35 you can save if you have accumulated 1000 points?? Even if you run a daycare, dropping $1000 at Kroger a month is going to be a stretch, but fortunately, they have a special….you can buy gift cards, and earn double points…all the time, and usually every couple months you can get quadruple points. This changes the equation considerably. With double points, you buy a $500 gift card, and you save 35 on your next fuel purchase. Not too shabby. If you hold out for quadruple points….a $250 gift card purchase gets you 1000 points, and $35 off your next gasoline purchase.

Now I can already hear it….”What the heck am I going to do with a $250 gift card? It turns out, Kroger has a crap load of different cards to choose from. I buy cards from places I am planning to spend money anyway. Amazon, Virgin Mobile(my cell provider), and assorted restaurants are what I usually get, but I recently bought $750 of Southwest Airlines for an upcoming trip. You can even buy Target or Shell gas cards, so it’s not really hard to find a card for a place you were going to spend money at anyway. That said, it obviously doesn’t make sense to buy gift cards for something you weren’t going to buy anyway…so don’t get silly.

Let’s run through the math on a best case scenario. Say you have an upcoming trip, and are about to book a $250 ticket on Southwest Airlines with a credit card. Instead, you run to Kroger and buy a $250 Southwest gift card during their 4X points promotion. On the way out, you purchase 35 gallons of gasoline for your truck. Here in Houston, the going price is about $3.30, but you save $1 per gallon. You end up paying $80.50 for your 35 gallons, saving $35, or 30%. Then you go home and book your flight…all in with $35 extra in your pocket.

That’s nice right…but the title clearly says 47%…how do I get to there? Getting to 47% requires a bit more effort on your part. The trick is to use a rewards card that gives you extra cash back at grocery stores. I use the American Express Blue Cash Preferred. It gives you 6% back at grocery stores on up to $6000 per year. (used to be unlimited…boo!!) It has an annual fee, but if you use it like I do, the math works out. There are a ton of other cards out there….every extra % you get is money in your pocket.

So let’s run through the math one more time with a rewards credit card. This time, I show up to the register and in addition to my $250 Southwest gift card, I also purchase a Kroger gift card for $80.50. Why?…I use the card to purchase the gasoline I am about to buy, and thus save 6% on this as well. At the end of the day, I save the $35 I did before, plus 6% of $330.50 ($250+$80.5), an additional $19.83. You should get a credit for this amount on your next billing statement. In this example, I have paid $60.67 (80.50-19.83) for 35 gallons of gasoline that retails for $115.50 (3.3*35). Run the math, and you have saved $54.83, good for 47% savings on your gasoline.

Before you run off to stick it to the man…here are some very important notes:

First and foremost…the $1 discount applies to up to a 35 gallon fuel purchase. If you don’t get 35 gallons, you are leaving money on the table and you will never make it to 47%. That said…unless you drive a V10 Ford Excursion, you probably don’t have a 35 gallon tank. There are two ways to get around this. First is to simply fill up two cars. I have a Suburban with a 31 gallon tank and a Ford Escape Hybrid that I’ve never managed to squeeze more than 13 in. Technically, the fine print says one vehicle, but I’ve never had anyone say anything in over two years and dozens of fillups. This option takes some coordination and drives my wife nuts….but the saving is worth it (to me). The second option is to bring some gas jugs along with you. This option is even more annoying. First, unless you have a truck, you are going to stink up your car, and it’s probably not terribly safe either. Then, when you get close to empty, you have to sit in your driveway for 10 minutes dumping fuel from a jug into your tank. It’s a huge pain, but that hasn’t stopped me yet. Fortunately, I am usually able to make option #1 work.

Another note is timing. Points have to be used in the month earned, or the following month, or you lose them. Their latest 4X offer ended 4/2, which is when I purchased the $750 of Southwest Gift Cards…so I have through 5/31 to use the 3000 points I “earned”. If you let your fuel points expire…you have left $ on the table….so plan accordingly.

Allocation of savings: At the end of the day you have saved $54.83. Was that saved on $115 of gas, $250 of gift cards, or on your credit card as a whole…or some combination of all of the above? The $ stays the same….but the % really depends on how you think about it. Honestly, the % is not that important. What really matters is if going through the hassle of purchasing gift cards and maybe even hauling around jugs of gasoline is worth $54.83 to you.

Finally… and this advice really is not limited to this scenario…putting things on a reward card, and not paying that card off in full every month will significantly reduce your true savings as interest will wipe it out in no time.