Gas Credit Cards – Pay at the Pump and Save Money?

July 2, 2008

Saving money on gas by paying with a cashback gas credit card is one of the ways that people are helping cope with higher fuel prices. An article on MSNBC reports that according to the National Association of Convenience Stores:

“about two thirds of transactions at gas stations were with credit or debit cards in 2007”

Of course, not all of those are cashback cards but even so, that’s a lot of people who are earning some type of rewards for buying gas on credit. 

The reason that credit card companies offer cashback rewards is to encourage consumers to use their cards to pay for purchases.  They can afford to give you money back because they’re charging the merchants a fee to process the payment, so every time you swipe your card, credit card processors are making money.

Gas Stations Feeling the Pinch
The gas stations have always paid a percentage of each sale to the credit card companies. It’s been worth it to them to pay this amount because customers have come to expect gas stations to offer the convenience of payment with credit cards.  Paying at the pump with credit makes it easier and faster for customers to buy fuel, which is obviously a benefit to gas stations.

The problem that fueling stations are running into is that the percentage fee they’re charged increases along with the total cost of the transaction. I’m not sure the reason why the fee scale is setup this way, perhaps to help offset the risk of non payment to the credit card company as the dollar amounts increase.  Whatever the reason, as gas prices climb the fees take a bigger bite out of gas station profits. 

Owners are not happy about this and would like credit card companies to change their fee structure. The article explains the opinion of the National Retail Federation:

“Gas stations are paying more in interchange fees because the price of gas has gone up, while the cost of processing credit or debit cards remains the same.”

Gas Stations May Stop Accepting Credit Cards
Gas stations are working on regulations to address the fee structure but meanwhile some of them are no longer taking credit cards as forms of payment.  In fact, some stations may start offering discounts to customers that pay with cash.  One additional benefit of this change to gas station owners is that if people have to come inside to pay, they’re more likely to buy something else from the convenience store.

My Gas Payment Strategy
I’m going to continue to use credit cards to pay for gas as long as I can for several reasons.  Not only do I earn cashback on my card, I also use the credit card as a financial tracking tool.  My family hardly ever carries cash, instead we charge everything and just pay off the bill every month.  The simplicity of not needing cash and a consolidated tracking system is something we’ve gotten used to and that works for us.

The convenience of paying at the pump is another reason why I’ll continue to use plastic as long as I can.  Being able to avoid the trip inside and potentially waiting in line is a nice benefit, after all time is money. 

Going back to something I mentioned earlier, if I don’t go inside the gas station, I won’t buy anything in the convenience store.  Self control over buying junk isn’t a problem for me as an adult, however kids don’t have the same level of discipline and as our son gets older I have no desire to fight the “I want this gum daddy” battle every time I fill up.

No More Credit?
I doubt that every gas station will stop accepting credit cards but I wouldn’t be surprised to see it as a growing trend, especially for the smaller struggling stations.  We may look back and remember the “good old days” when every filling station took credit as payment : )  If you’re not taking advantage of gas rewards cards now you might consider it since it may be harder to do in the future.


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Ben Edwards, the founder of Money Smart Life, saved up enough to buy a Nintendo back when he was 12 years old. When he used the money to buy shares of Wal-Mart stock instead, he knew he wasn't like the other kids... His addiction to personal finance has paid off for his family and now he's helping you to afford the life that you want. Check him out on the web at Google Plus, Twitter and Facebook.

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8 Responses to Gas Credit Cards – Pay at the Pump and Save Money?

  • Mike

    I feel what will happen is credit card companies will be forced to lower their fees for gas stations. I bet if they lowered it just 1% or so the stations wouldn’t have as much reason to resist them. I don’t blame them though I review gas credit cards and I can understand why stations don’t like them, especially the mom and pop shops.

  • ConnieBrooks

    Some gas stations do give a discount for using cash – the one I go to does. We save an average of 5 cents on the gallon by doing it this way.

    I do not have a cash back rewards card right now, but if I did you can bet that I would be using it for gas!

    Buying stuff at the “convenience store” is an important point. Whenever I go in I always catch myself grabbing a cola or a pack of gum – stuff I really don’t need to use, much less spend money on.

  • Joe

    Another reason we like shopping at Costco where they only accept credit or debit cards on gas purchases. Those fees are already factored into the price of gas, despite Costco’s prices being $0.05 to $0.20 or more cheaper than other stations in the area.

  • donald

    why don’t gas stations just give a 2-3% discount if paying by cash like some computer parts stores do.

    sure it’s a couple of dollars maybe at most but maybe they will turn around and buy some gum with it … win win!


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