Friday, April 25, 2008

Cheap gas isn't always cheaper

Ever notice that some gas stations are able to consistently offer gas that is 10 cents cheaper per gallon than the other gas stations around town? People flock to these stations and wait in long lines to get the "cheaper" gas. Are these stations just trying to set competitive prices to attract customers or is there something more sinister going on here?

Where I live, Arco is usually a good 10 cents less per gallon than other stations like Mobil, Shell, or Chevron. It seems like a great deal, until you realize that they don't accept credit cards. Who carries $50 in cash to fill up their tank? But wait! They accept ATM cards! No problem. So you fill up your tank on the cheap and use your ATM card to pay for it. Except, it probably isn't much cheaper if you realize that you're being charged $1.00 for the convenience of using your ATM card. D'oh!

We can also factor in that when you use an ATM card or cash you are not receiving any rewards that you would if you were using a cash back credit card (and you should be). Personally, I would receive 3% back on my purchase.

So if gas is $3.67 at Arco and I fill up 15 gallons, we could thus calculate:

$3.67 x 15 = $55.05 + 1.00 = $56.05

But if I pay the extra 10 cents at another gas station and get the same amount of gas and use my credit card, I pay:

$3.77 x 15 = $56.55 - $1.70 (3% cash back) = $54.85

Blimey! Paying more for gas actually works out to be cheaper in the long run, even if I don't pay the $1.00 ATM charge...and I don't have to wait in the long lines at the "cheaper" gas station!

Lesson be learned - sometimes it pays, to pay more.

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5 comments:

Deborah said...

I can't remember the last time I went to a gas station that didn't take credit cards. And I thought I lived in the country! :) I use my debit card or my credit card to pay for everything. I've never used my debit card as an ATM card - I don't know my PIN (on purpose), so I never get charged ATM fees. I just can't get past a gas station that doesn't take debit or credit cards.

FindSavings said...

True story, I had a roommate back in college who researched gas prices to find the cheapest station around. The one that he usually went to was about 18 miles from our apartment and he would plan a special trip to go there when he needed gas. It probably cost him 1-2 gallons to get back and forth and an hour of his time to save 10-20 cents per gallon. He thought it was worth it and did this for the year and a half that we lived together.

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