Once bitten, twice bitten: paying for gas with credit

Here's a truly horrifying article: a far too high percentage of Americans are using credit cards to pay for gasoline. [Emphasis mine.]

Convenience stores, which sell about three-quarters of all gasoline sold in the nation, have seen the use of credit cards for motor fuel purchases rise to 70 percent of all gasoline purchases from about 54 percent last year, according to the industry group. [. . .]

There's more. . . .

According to travel club AAA, the national average price for a gallon of unleaded gasoline hit a record of $2.614 a gallon Monday, up from $1.881 of a year ago.

And with a credit card, that $2.60 plus a gallon can easily morph into $3 a gallon if the consumer doesn't pay off all charges immediately and finance and interest charges start to accrue.

Add in the change in credit card rules in a couple of months, and things are going to get even uglier.

I can understand why Hawaii set a cap on wholesale gas prices:

Hawaii's recently enacted gas cap law goes into effect on September 1, with the pre-tax wholesale cap in Honolulu set at $2.1578.

Hawaii, being isolated, pays higher costs than a lot of places; even here in Connecticut, where $2.56 is actually below average for the state, it's cheaper (and CT, like Hawaii, has some of the highest gas taxes in the nation).

In any case, the pain is real, and using credit cards isn't going to make things any better; on top of putting yourself further in debt (if you carry a balance), you're giving more money to the credit card companies, which cannot possibly be a good thing.

•  Tip jar

  If you want to . . .

  by Samer on Thu Aug 25, 2005 at 12:48:56 PM PDT

•  I would imagine

  that it has something to do with the fact that one $20 bill won't cover gas anymore and those 'pay at the pump things are really convenient...

  by DCArchitect on Thu Aug 25, 2005 at 12:52:37 PM PDT

•  pay at the pump is usually quicker

  and feels safer in late-night-alone situations.  sometimes i use a debit card, other times a credit card that i pay off every month. i know not everyone has the privilege to do that easily, but it works...

  by decafdyke on Thu Aug 25, 2005 at 12:56:21 PM PDT

  •  If you don't have a timescale to pay it off

    don't buy it. That simple. Unfortunately, a lot of people are living on credit nowadays.

    At the same time, there are a lot of people who use credit cards for points or moneyback. I'm one of them, and it also gives me versatility in handling money - my wife makes the lion's share of our income, and as long as we stay in budget for the month, we can pay everything off at the end without having to constantly juggle how much money is in each of our accounts.

    by Expat Briton on Thu Aug 25, 2005 at 01:06:54 PM PDT

•  The study does not seem to differentiate

  between debit cards and credit cards. I use pay at the pump with a visa/check card which is indestinguishable from a revolving account credit card, but it comes straight out of my checking account.

  by roysol on Thu Aug 25, 2005 at 01:01:45 PM PDT

•  Debit/Credit interchangable

  The article doesn't appear to differentiate. I am willing to bet that some of the data includes people that have their debit card counted as a credit card.

  For example, my debit card is also considered a MasterCard. Doesn't mean anything at the pump, except if I forget to hit debit, I sometimes see a $1 charge on my monthly bank statement.
  

  by B Rubble on Thu Aug 25, 2005 at 01:05:08 PM PDT

•  For once I did something right

  Instead of throwing away all the credit card junk mail, I read it one day in early July and signed up for 5% cash-back on gasoline purchases with my AT&T Universal Card.  It's good for 6 months.  I haven't put anything else on it, so can (painfully) pay it off each month.  It shows up as a direct credit to my account balance.

  Today, it saved me 0.12 per gallon.  Not much, but better than nothing.  

  by texasmom on Thu Aug 25, 2005 at 01:13:01 PM PDT

•  When will price affect demand?

  Every consumer interview I've seen lately claims they aren't cutting back on gas consumption, but they'll cut something else!

  I use a credit card for everything to get airline miles, and always pay in full every month. But, nearly everyone I know carries a hefty balance.  Higher  minimum card payments + increasing fuel prices (think winter heating) + rising interest on ARMs + possible housing bubble burst + energy cost related inflation, + low wage increases, etc, etc, etc, = fit hits the shan.

  by Cecile on Thu Aug 25, 2005 at 01:17:38 PM PDT

•  Only buy durable goods with credit

  is my rule. Buying consumables such as gas , groceries, liquor, etc on credit is plain dumb, if you don't pay the entire balance EVERY month. On a related note, that sofa you bought on the don't pay for 24 months deal is going to be pretty ratty by the time the two years plus the 10 year paydown period is over.

  by peterborocanuck on Thu Aug 25, 2005 at 01:45:31 PM PDT

•  Credit card

  But we (usually) pay it off each month. I'm not about to carry around the kind of cash needed to keep my 40MPG Civic fueled up between paychecks.

  by dirtroad on Thu Aug 25, 2005 at 01:47:30 PM PDT

•  One other reason to pay cash.

  In New Jersey, you don't have self-serve pumps, but you do occasionally find gas under $2.50.

  So long as you read the sign carefully, and spot the notice:

  This price includes a 5 cent per gallon cash discount.

  So the price listed at the pump is not the price advertised.

  I seriously think gas prices will be what wrecks the US economy for everyone but the fat cats.  Already people are complaining about $50-plus refills for their SUV's.  When I go home tonight, I expect to be hit with $30 for refilling my tank - and I'm driving a moderate-sized sedan.

  by BruceK on Thu Aug 25, 2005 at 01:51:59 PM PDT

•  I've never paid for gas with cash ever.

  And, I've been driving since a few years after the last gas price spike.

  If you pay your balances in full every month on the card you use to pay for gas with (as I usually do) or have a debit card (as I have occasionally done), there is no downside to paying with plastic.

  Also, it isn't at all clear that the statistics distinguish between credit and debit cards.

  People are paying with plastic rather than cash simply becaus pay at the pump is faster than going inside and waiting in line to pay a cashier.

  by ohwilleke on Thu Aug 25, 2005 at 02:53:34 PM PDT

•  Since the study doesn't distinguish b/w

  credit/debit card use, I doubt there's been any substantial change in HOW people are paying for gas.

  Personally, having lived in Europe for 10 yrs, where I was accustomed to paying ca. $75 to fill my tank (and where everyone's driving habits were far more sensible as a result of this), the rising price of gas is not one of my primary concerns. If anything, perhaps the ONLY positive effect the Bush regime may be having on the country -- since more people are turning to hybrids as an alternative.

  For the record, comparison in Euros of the price of gas in

  Great Britain 1.36 Euro / liter
  France 1.08 Euro/ liter
  USA .46 Euro

  I'm tired of hearing people complain about the price of gas; we have far more serious issues on our hands: starting with a criminal regime in office.

  by starkravinglunaticradical on Thu Aug 25, 2005 at 04:44:54 PM PDT