Many gas stations offer cash discounts on gasoline prices, so you may be able to save more money on gas by paying with cash than you would with a gas rewards credit card.
If a gas station near you offers discounted cash prices, you may wish to consider this option, instead of paying at the pump with a credit card.
Why Gas Stations Offer Cash Discounts
Gas stations have to pay the credit card companies anywhere from 2% to 3% of each sale in merchant fees when you use your credit card to pay for gas.
When you pay in cash, the gas station can instead offer you a discounted price, as they no longer have to pay the fees.
Amount of Cash Discount Savings at Gas Stations
Cash discounts at gas stations can save you anywhere from 5 cents to 10 cents per gallon on average.
My local Lou Perrine’s gas station is currently offering a 12 cents per gallon discount for regular unleaded fuel, which is equal to the lowest gas prices in my city at Sam’s Club.
Benefits of Paying with Cash
One of the benefits of paying with cash is that there is no limit to the amount of savings that you can receive.
You can buy as much gas as you want, and you’ll always receive the same discount, just as long as you pay with cash.
Credit Card Gas Rewards Savings, on the other hand, are often limited by the amount of rewards that you can earn within a certain period of time.
For instance, a gas rewards card may offer a 5% rebate on your gasoline purchases, but there may also be a $250 yearly earnings limit, so that your actual savings would be limited to the maximum amount allowed.
Benefits of Paying with Credit Card
The biggest obvious benefit of paying with a credit card is the convenience of paying at the pump.
Plus, you can simply fill up your tank until it’s full, instead of filling up to the set dollar amount that you paid inside.
Paying for gas with a credit card is also easier for managing your expenses, and even more so if you are running a business with fuel expenses.
Gas Cash Discount Versus Credit Card Rewards
Whether you will save more money by paying for gas in cash or with a credit card really comes down to how much gas you purchase on a regular basis, how much of a cash discount your local gas station offers, and how much cash back your credit card rewards program offers on gas purchases.
If one of your 5% Quarterly Rebate Cards is offering a 5% rebate on gas purchases in a given quarter, and your gas spending will not exceed the maximum earning limit, then you will probably benefit most by using your credit card, because most gas stations are not going to offer that high of a cash discount.
However, if you purchase a lot of gas on a regular basis, and your local gas station offers a 10 cents per gallon or higher discount, then you’ll probably benefit more by paying with cash for the unlimited savings.
Of course, you have to find a local gas station that offers cash discounts, but there is usually at least 1 independently-owned gas station in every town that does.
Weigh your options carefully and do the math to see which option is better for you to save more money on gasoline prices.