Credit Cards for Gas Usage
By Keith Bunn Jr.
I was asked a question the other week if using credit cards for gas usage was a good idea or not, if you get the 5 to 10 cents off per gallon and pay them off right away. Well, if you've following me for 30 seconds, you'd know that I absolutely hate credit cards! I think credit cards are nothing more than legalized "Loan Sharking".
But I have to admit, I really didn't have a good answer to the question other than, "I hate credit cards!" So seeing that the person's question was about a specific, local grocery store/gas station credit card, I went and got the application and read it over.
After reading over the information on the application, I came to find out that there are 2 different cards. A regular one that is nothing more than an in store credit card that could only be used in the grocery store or gas station. The other one is a Platinum Master Card which can be used anywhere that takes a Master Card.
The in store card has an annual percentage rate (APR) of 26.99%, but the application also says, "This APR will vary with the market based on the Prime Rate."
The Platinum card has 2 different types of accounts, which are based on your "creditworthiness". Type #1 has an APR of 19.99% and type #2 has an APR of 23.99%. And again it says, "This APR will vary with the market based on the Prime Rate."
And just like any other credit card that is out there, there are fees you must pay if you're late making a payment. And for both cards it could either be a $25 to $35 late fee.
I know what you're thinking, "This is all fine and dandy, but you won't have to pay any interest or fees if you pay it off each and every time it's due, like the question was asked." And you would be right, "IF" people paid the cards off when they were due each and every time. And that's a big word, "IF".
You Have to do the Math
Statistics show us that only 55% of credit card holders pay their cards off each and every month. So that means 45% don't. So by someone thinking, "I'll get the card to save on gas and pay it off right away." doesn't always happen. I know we plan on doing things a certain way, but life sometimes steps in and screws up our plans. Job loss, car breaking down, someone gets sick, a death in the family, etc... can all happen and cause us to lose sight of our goals.
Let me explain it this way... On an average fill up, you'll be saving 75 cents (.05 cents per gallon) when you use either one of the cards talked about above. And if the grand total you had to pay was $40 and you put that on your gas credit card and didn't pay it off at the end of the month, at best, you would have to pay $75 for the same amount of gas that would have cost you $40. At worst, you would have to pay $86. Over double the cost for the same amount of gas. By not paying off that monthly credit card bill just that once, you'll have lost every once of savings you signed up for in the first place.
Now I don't know about you, but I get gas every other week. So if I were to use one of these gas credit cards, bought my gas for the month and forgot to or couldn't pay my bill at the end of the month, I would then have to pay between $121 to $137 for $80 worth of gas. Folks, that's just screwing up once. Imagine doing that month after month. You can see how much that adds up. So again, using credit cards for anything, even just for gas usage in my opinion, is not a good idea.
Something to think about
When any store, company, or institute offers you some kind of rewards program, look it over first before signing up. Do the math if necessary to really see if it is a good deal for you or for them. There are good deals out there if you look for them. They haven't all disappeared yet, even for gas usage. So look for them and just don't take things at face value.
The reason I do this, is to give people hope and to try to inspire others. To make people think about their finances, whether they are young or old, so they can win financially.
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