Saving money at the pump

NEW YORK (CNNMoney.com) -- Gasoline prices have lagged far behind the run-up in oil prices, but that's starting to change. Here are some tips on how to save at the pump.

These cards can save you 3 - 5 percent on your gas purchases. Consider this: if you save $.05 cents on every dollar you spend and gas is at $3.00 a gallon, in reality, you'll be paying $2.85 a gallon. "It's no gimmick," says Curtis Arnold of Cardratings.com.

Here's what you need to look for in a gas card. First, make sure you're getting a rebate of at least 3 percent on your purchases. Check for any limits on what you can spend. You'll want a cap of at least $600. No cap is even better.

If you are loyal to one particular brand of gas, you'll want to get that company's gas rebate card. But if you tend to use a few different gas stations, make sure you get a bank-branded gas rebate card.

Watch out for expiration dates on when you can redeem your rebate. It's better if you have a card that automatically credits your account for the next billing cycle.

And make sure you can pay off your balance on time. Gas rebate cards generally have higher interest rates at 16 -18 percent. Two of the best picks in the category, according to Cardratings.com is Discover's Open Road and Chase's Perfect Card.

Prices tend to change between 10 a.m. and noon local time, says Brad Proctor of gaspricewatch.com. Bottom line: buy gas in the morning on your way to work, rather than on the way home.

That's because the major gasoline player in the area (BP or Shell for example) generally receive orders from the corporate office to either raise or lower prices based on what competitors are doing and what the oil markets are doing.

Once the orders come down, all the competitors in the area are forced to raise their prices. One reason you won't see prices move during the weekend is because the managers at the corporate office aren't working.

Forget the higher octane gas. Most engines are designed to take regular unleaded gasoline, which has an octane rating of 87. Using higher octane premium gas in an engine that is designed to run on regular doesn't improve performance.

And even engines where it's recommended you use premium gas can run on regular without any problems. The bottom line here is that paying for premium gas is usually a waste of money.

Doesn't it always seem to happen that just after you fill up your tank, you find a cheaper gas station? Before you pull out of the driveway, find out where the cheapest are. Check out www.gasbuddy.com and www.gaspricewatch.com. These Web sites list prices of local gas stations.

While you're online, check out the fastest route to your destination. Go to www.traffic.com. You'll get real-time updates on construction and traffic jams.

As a result of increased gas prices, some SUV manufacturers are increasing incentives, according to Philip Reed of Edmunds.com. In fact, incentives for large SUVs have increased almost $1200 since 2002, according to Edmunds.com.

But beginning next year, there may be a new breed of cars designed to save gas. SmartCars, those little European vehicles, will be debuting this January. These tiny cars get about 40 mpg. They're priced from $12,000-$18,000, according to Edmunds.com. Orders are already being taken at smartusa.com.