Pay Cash for Gas for Discount?
An article in USA Today mentions a new method of saving money at the pump, paying in cash. The article cites a pump in South Carolina offering a four cent discount on each gallon of gasoline in return for payment in cash as opposed to credit. Considering that credit cards charge a percentage of the sale and a flat rate, this is a win for the gas station, a business with low profit margins (all the money is in the convenience store). While this is a win for the station, it’s a lose for the consumer.
Considering you can get a 5% cashback card on gasoline purchases and gas at, say, $2.50 (good luck finding that around here) per gallon - 5% is 12.5 cents. You personally save eight cents more by using credit over cash. (if you have a 5% cashback card, if you don’t, then the cash option is better)
15 responses to “Pay Cash for Gas for Discount?”
Anon responds:
Posted: May 31st, 2006 at 4:03 pm
Isn’t this counter to the credit card merchant’s agreement? Perhaps there is a special exception for gasoline, but I doubt it. I imagine this fellow won’t be accepting credit cards at all before long.
Nick responds:
Posted: May 31st, 2006 at 4:13 pm
Discounts for cash payment, oddly enough, are perfectly in line with card merchant agreements. It’s adding a fee for using a credit card that’s not okay. I think it’s a silly loophole, but it’s there for people who want to use it.
Jason responds:
Posted: May 31st, 2006 at 4:23 pm
I’m surprised that the card companies allow this since its essentially the same thing as adding a fee for using a card. I don’t necessarily think its bad for the consumer. Other than people who read finance blogs, message boards, etc, few people I meet know about the 5% cards. For those and people who still pay with cash this is helpful.
Anon responds:
Posted: May 31st, 2006 at 4:27 pm
I’m not sure how those are different, but the Google seems to agree with you. I still wouldn’t think Visa or Mastercard would be amused.
CK responds:
Posted: May 31st, 2006 at 4:54 pm
I think the credit convenience (the time savings) outways the cash discount, especially when you figure in any type of rebate you might get from the credit card. I dream of a world where no cash is required.
jim says in reply:
Posted: May 31st, 2006 at 5:05 pm
Yeah, I dream of the day where cash is not required and identity/credit thieves are executed on the spot.
CK responds:
Posted: May 31st, 2006 at 5:09 pm
By the way great business move by the gas station. Drives people into the stores to buy high margin items.
Tony responds:
Posted: May 31st, 2006 at 5:30 pm
What gas rebate card do you folks recommend?
Anon responds:
Posted: May 31st, 2006 at 6:17 pm
Citi Dividend Platinum Select or Citi Drivers Edge Platinum Select (if you drive A LOT).
MoneyDummy responds:
Posted: May 31st, 2006 at 7:11 pm
I’m surprised USA Today ran an article about this. This is OOOOLLLLDDD news where I come from. (Maverik’s been doing it for about five years. Or perhaps it would be more accurate to say that they were doing it five years ago.)
Matt responds:
Posted: June 1st, 2006 at 5:53 am
I saw this a lot when I was on my recent road trip South. I don’t think I’ve ever seen a station North of, say, Tennessee, that did this, but it seemed pretty common in MS, AL, and LA.
frugal mama responds:
Posted: June 1st, 2006 at 1:34 pm
Where does using a debit card fit in?
denon responds:
Posted: June 1st, 2006 at 10:50 pm
This isn’t a new idea, lots of local and coop stations have been doing it honestly for decades. Also, I think it’s more of a win for the consumer than you give it credit. For one thing, you have your reward *instantly*, and can put it on interest - never even had to pay it. You don’t have to hassle citi to get your check, you’re not capped per-year, and there’s no risk of it getting reported as income (like a credit card bonus may be). After all, there is no income. Finally, in the case of the local station, the money is staying local.
I actually like the idea of things getting more *away* from credit cards. Granted, I use my amex blue, citi dividend, etc every chance I can. But if someone gives me a compelling cash reason to do business without visa, I’m happy to oblige. There will come a point when we wondered why on earth we would ever trust 3-4 large companies with global finance..
Free Money Finance responds:
Posted: June 2nd, 2006 at 10:31 am
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The One Hundred Ninety-Fourth Carnival of the Vanities | Punny Money responds:
Posted: June 7th, 2006 at 3:57 am
[...] Anyone planning to buy into gas discounts by paying in cash should read jim’s advice over at Blueprint for Financial Prosperity. Despite the discount, there’s a much better way for you to save even more at the pump than a paltry four cents. You personally save eight cents more by using credit over cash. (if you have a 5% cashback card, if you don’t, then the cash option is better) [...]