Last June, I noticed that a few gas stations in my area were charging different prices for gas depending on whether your method of payment was cash or credit. My biggest problem was that this wasn’t advertised on the large signs attracting drivers to the station. The station later changed its signs, though the cash price appears in the spot where one would normally see the “regular unleaded” price, and the credit price appears where one would expect the “plus unleaded” price. The labels “cash” and “credit” are only legible up close.
This “cash discount” is a joke. The cash price is the competitive price relative to other local stations and the credit price has increased more significantly. This is just a sneaky way of getting around Visa’s and MasterCard’s requirements for merchants not to charge more for customers who use credit cards. I am aware the credit card companies charge transaction fees that can cripple gas station owners who make very thin profits on gasoline, but this is not the answer, particularly if they must run misleading advertising to compete with other stations.
The price discrimination first occurred shortly before I moved to a new town, so I didn’t have to deal with it at that time. Once I moved, I found a local, low-price gas station on my daily route that did not offer a “cash discount.”
Last night, I pulled into my low-cost station on the way home from the office, just like I have been doing several times a week for the past 11 months. As pumping our own gasoline is against the law in New Jersey, I asked the attended to fill up the tank. It wasn’t until the tank was almost full that I glanced at the sign on top of the pump to see how high the prices increased over the weekend. I noticed there were two sets of prices, one for cash and one for credit.
Curses, foiled again. Some time in the past few days the owners of this Raceway gas station decided to offer a “cash discount” as well, just like the Valero station near my old apartment. The large sign attracting drivers to the station had been changed to list cash price first, followed by credit price in the “plus unleaded” location, with small labels reading “cash” and “credit.”
The price difference between cash and credit was ten cents. I’m considering opening up a CitiBank Driver’s Edge credit card, currently offering a 6% cash back rebate on gasoline purchases. That rebate would make up the ten cent difference and more, but I’d rather not open more credit cards.
I’d also rather not carry around cash for fueling my car, considering it cost almost $40 to fill up last night. I would save $2.00 to $3.00 a week by paying with cash. All other gas stations are either more expensive or out of the way. Perhaps I’ll try cash for a while, but I’ll have to get used to withdrawing about $100 more than I usually do each week. If I adapt, I’ll have perhaps an extra $150 saved after one year.
Updated March 28, 2010 and originally published May 20, 2008.