Cash versus credit pricing is exactly like it sounds – a merchant selling fuel may charge a customer different prices based on how they choose to pay for their fuel, whether using cash or credit card. The cash price is less expensive than the credit price. This is because when a fuel station charges more for credit fuel purchases (or less for cash), they are trying to offset the processing fees they are being charged by credit card companies every time their customers swipe a card.

What Do the Prices Actually Mean?

You might see the price difference between cash and credit in a few different ways, depending on the state:

  • Some states advertise a price and charge more if the customer pays with credit – a credit surcharge.
  • Some states advertise a price and charge less if the customer pays with cash – a cash discount.
  • Some states advertise two prices – one credit price and one cash price.

Surcharges for credit purchases have been outlawed in some states. In these cases, a merchant selling fuel will usually raise the overall price of fuel per gallon to reflect the amount of the ‘normal’ price plus the credit card fee. Then they will offer a discount on that price per gallon for customers who pay cash. The credit surcharge becomes perfectly legal when it is positioned as the standard price with discounts for cash.

In states where you see two listed prices, it was likely mandated by law. Fuel stations in these states are required to show two prices, for example $1 per gallon for cash and $1.06 per gallon for credit. When looking for a fuel station in a state with two listed prices, is important to consider which price is more obviously advertised. Most often, the prices advertised prominently (think large highway billboards) reflect the cash price, which is lower.

Another thing to consider is the future of debit card purchases. Currently, using a debit card to pay for fuel at some stations might mean that you pay the higher credit price. However, recent legislation may result in a third type of pricing for debit cards, which will fall somewhere between cash and credit price.

What Can I Do About It?

Whether you’re operating a large fleet or a single truck, fuel is one of your largest operating costs. When considering any added cost per gallon, even if it’s just a few cents, it’s worth looking into your fuel purchasing options.

Carrying around large amounts of cash to pay for fuel may not be reasonable or worth the risk. And some credit cards may offer cash back on certain purchases, like fuel, but make sure you do the basic math on how much you’d actually save. You could end up paying more than even the credit price when you factor in interest rates, fees (for things like late payments), and whether any cashback offers on fuel are promotional and available for only a certain amount of time.

Another option is signing up for a fuel card. Look for a fuel card that offers discounts off the cash price and make sure you consider any transaction or monthly fees when choosing a card. A low per-transaction fee, for example 50¢, will likely end up costing you less than paying 6¢ extra per gallon for a 150-gallon fill up. And if you have a fuel card with great discounts off the cash price (think 18¢ off the cash price), you could end up saving far more than you would have with just the cash price discount.

Still have questions? Reach out to RTS Financial today for more information.

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