Gas Discounts: Cash Versus Credit

This past week I spent time up in Michigan with my family.  I drove there, and of course had to stop a few times to get gas.  There were a few things I noticed over the different places I observed gas prices.  For one, it was cheaper to buy gas when I left on Saturday, May 28 in the South versus anywhere else I saw.  While in Michigan over the week, I noticed the gas prices jumping to $4.19 a gallon! Ridiculous.  I thought gas prices were supposed to go down.

Another thing I hate about getting gas in Michigan is that there’s a different price for cash versus credit.  Where I live, this option does not exist, and I am so glad!  I use a gas rewards credit card to earn money back on each gas purchase, so when there’s a difference of ten cents a gallon less when you pay cash, it kills me!  I can’t help but think I could be getting the gas cheaper if I was strictly paying cash.  Of course, if I calculate it, my 4% back on gas purchases at $4.19 a gallon is a 16 cent rebate, so I’m still six cents ahead when I use my credit card.

I understand why merchants give a discount for paying cash (or stick it to the people who pay with credit cards!): credit card processing fees.  Merchants have to pay a credit card processor a certain percentage of each transaction that is charged at their store.  When customers pay cash, the merchant doesn’t have to pay any fees to anyone and the cash is immediately available to them to use.  Sometimes credit card processors wait days to make the funds available to the merchants, making it harder for them to operate their businesses.

While I do hate the fact that there’s a price difference for paying cash versus credit at the pump, I understand the reasoning behind it.  I also think there are many people who are far too lazy to get out of their cars to go pay for their gas.  Plus, if they’re anything like me, they hardly ever have cash on them!  I don’t carry more than $20-$40 on me at all times because if I have cash, I’ll spend it.  I wouldn’t have the $60 on me that it probably would take to fill up my tank.

Another tricky thing I noticed when I went to get gas at one gas station is that they switched the location of the cheapest gas.  I always get whatever grade is the cheapest, and it’s normally the very last one on the left.  When I went to get gas, I grabbed the last pump on the left and then looked at it.  It was actually the middle grade!  Had I not been paying attention, I would have gotten the more expensive gas!  That kind of irked me.

I hate when gas prices fluctuate like they have been.  I wish they would just stay around one price so we wouldn’t have to worry that we won’t be able to afford gas in the near future.

Have you noticed gas stations doing weird things like the cash versus credit discount? What angers you about the gas prices lately?

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Picking the Right Credit Card for Overseas Travel Can Save You a Lot of Green

This is a guest article written by Odysseas Papadimitriou, the founder and CEO of Card Hub, an online marketplace for discounted gift cards and the best credit card deals.

For many people, especially recent college grads, backpacking through Europe is a rite of passage. It’s a time to see the world, to enjoy a life devoid of obligation and to come of age. However, despite all the freedom and growth such a trip can inspire, one of the lasting takeaways is often the impact it has on one’s finances. In fact, this is true whether you’re backpacking or staying in five star hotels, whether your degree is hot off the presses or you have an established career. Foreign travel is unfortunately quite expensive, and if you don’t take a few simple precautions before embarking, it will be even more costly than it truly has to be.

The first thing anyone traveling abroad needs to do is make sure they have debit cards and credit cards with no foreign fees. While such spending vehicles will certainly prove beneficial abroad given that they largely mitigate the hassle of exchanging currency and the threat of pickpockets, you must make sure to get them before even booking a plane ticket, making hostel or hotel accommodations or arranging day trips. According to the Pew Charitable Trusts, 91% of bank cards have fees around 3% for any purchase processed overseas. Thus, these fees could very well be applied to purchases made through foreign companies, even if you are in the U.S. when you make them.

Next, and still prior to departure, make sure to notify your card issuer of your travel plans. This both decreases the likelihood that your card will be suspended due to suspicious activity and gives you a chance to ask for a number you can call for free from abroad should you experience any difficulties. After all, the last thing you want is to be stranded in a foreign city, much less a hostel, with a suspended credit card.

This is also one of the primary reasons to bring a debit card that allows you to get cash from an ATM at no extra charge. Besides, cash always comes in handy given that not every store accepts credit cards, particularly in less-developed countries. Even within the European Union, recent regulations have paved the way for restrictions on magnetic stripe credit cards, like the ones used in America, due to security concerns. While having your passport on you should alleviate any fraud concerns foreign merchants have as a result of your mag stripe card, it’s still a good idea to carry some cash.
So, once you have the proper debit card and credit card and you have crossed the “t’s” and dotted the “i’s” with your bank, all that’s left is to throw that pack on your back and hit the tarmac. However, the money-saving tips don’t stop here.

One very important thing to watch out for while abroad is dynamic currency conversion. This is when foreign merchants offer to convert the price of your purchase from the local currency to American dollars. While this might seem like a good idea, always decline this supposed service. Merchants typically use high conversion rates in converting purchase totals in order to make a profit off tourists who are understandably more comfortable with the dollar than they are with native currency. Therefore, all things considered, I think we’d all agree that brushing up on conversion rates or using your phone’s calculator is preferable to getting swindled.

Besides, you decided to travel abroad in order to learn about other cultures, so consider shopping to be part of this learning experience. As long as you use a credit card without foreign transaction fees, make sure to have a debit card that allows for ATM withdrawals abroad, and decline offers for dynamic currency conversion, your lasting memories of your trip can be about the sights you saw and the good times you had, not the toll it took on your bank account.

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We are Credit Card Debt Free!

IMG_0312 get rid of debt
Creative Commons License photo credit: kainr

Well, we did it! I bit the bullet and finally made the last payment on our Home Depot Credit Card.  It made no sense to me to keep making payments each month when we had the money to pay it off, so I just did it.  It was a wash anyway!

I could have kept the money in our ING savings account, but it seems that is not really a high yield savings account right now anyway. I figured that if I left that money in the savings account for 6 months I’d earn under $1.50. Was the hassle of making the payments each month worth it to me? No.

How does it feel to be credit card debt free? Fabulous! To be honest, I feel better than I did when we paid off our student loans. Crazy, right?

Next up: the car loan.  And then we’ll be 100% debt free except for our mortgage.  Woo!

What are you working on paying off right now, if anything?

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