Squeeze on Credit Card Fees

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I saw something last month that I hadn’t seen in years–literally, years. It was a gas station near my home that was advertising one price for gas paid in cash ($3.79 per gallon) and another price for gas paid by credit card price ($3.86 per gallon). Given that another gas station a mile or so up the road was charging $3.83 per gallon, regardless of how you paid, you can bet that is where I stopped to fill up.

But this cash-versus-credit price brought back memories of my teen years (the 1980s), when my mother would drive around our town a couple of times in order to find the gas station with the best price for gas. It was always the one that charged a little bit less if you paid cash. But back then, gas cost less than a buck, which meant she could fill up her Toyota Corolla for about $10. And who doesn’t have $10 in their wallet, even by 1980s standards?

Flash forward two decades and it costs me $60 or more to fill up my gas tank. I’m far from poor but I can tell you that I rarely have $60 in my wallet at any given time, which is why I prefer to pay for gas with a credit card. Also, because we download our credit-card bills into Quicken each month as part of our budgeting process, paying with a credit card (even if it costs me seven cents more a gallon for gas) makes the most sense for me.

FYI, a seven-cent difference at 15 gallons of gas–that’s how much my car holds–with a weekly fill up (assuming I fill the car weekly; I try not to) only amounts to $54. Should I make the effort to get that $54 a year (or less than $5 a month) back in my pocket? Probably. Will I? Not likely.

I can understand why gas stations have taken to offering competitive–and lower–prices for cash-only transactions. It seems that the credit card companies have been raking them over the coals with transaction fees–costs that they supposedly pass along to us, the consumer, whether or not we’re paying with cash, debit or credit.

Speaking of debit cards, their growing popularity has helped the major credit card companies to enjoy increased profits, despite our down economy. I mean, credit card spending may be down but debit spending is up, which is probably how a company like VISA could recently report a profit increase of 41 percent.

Of course, if you’re on a tight budget and don’t want to have the weight of credit card debt hanging over your head–and you can’t afford to pay your balance in full each month; we are lucky that we can–then cash makes sense. Some people have come to equate debit with cash for the convenience of it. But if it turns out that transaction fees from debit cards are hurting the American consumer as much as credit card fees, then perhaps we should all go back to a cash-only society.

Wait, even better, let’s go back to a barter society. (Did you know that there is a barter section on Craigslist?) Bartering would be cool.

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Filed under Craigslist, VISA, credit card fees, debit cards