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Cost-conscious motorists eager to take some of the sting out of rising gas prices need look no further than their own wallets. Many payment cards now offer modest discounts or cash back on fuel purchases. And with average gas prices somewhere near $4 a gallon in most states, every little bit helps.
"Consumers are thinking about high gas prices, and we are trying to address that need by offering products and services that consumers can take advantage of," says Julie Loeger, Discover Financial Services senior vice president of brand and marketing for Discover. "We are committed to putting the consumers back in the driver's seat."
Discover launched the Open Road card in 2005. It offers a 5% cash-back bonus on up to $100 worth of gas and auto maintenance purchases in a single month. Cardholders also get a 1% cash-back bonus on all other purchases. "We continue to have year-to-year increases," Loeger says.
It's all part of a "simple and straightforward" marketing strategy that aims to meet consumer needs, he says. Discover also offers users of its More Card a 5% break on hotels and gas during the summer months.
Justin McHenry, research director for www.indexcreditcards.com, which compiles and analyzes credit card terms and features, calls the gas cards a "hot button issue" for consumers trying to save a buck. "Everyone carries a credit card these days ... it makes sense to try and get something back," McHenry says.
Generally, gas cards offer a 3% to 5% percent discount or rebate on gas purchases, McHenry says. They often also offer consumers a smaller discount on other goods purchased with the card.
The BP Visa Rewards card offers a 10% rebate on purchases at BP gas stations for the first 60 days. The rebate then drops to 5%. The Chase PerfectCard Mastercard, meanwhile, offers a 6% rebate on gas purchases for the first 90 days. The rebate settles in at 3% after the introductory period.
Issuers have not drastically altered the terms and features of the cards in recent months, but they have wisely responded to the higher fuel costs by promoting the gas cards at the pump, McHenry says.
"Now, when you're filling your tank and you're reaching $70, you're thinking about how frustrating it is to pay that much, and so (the issuers) may be taking advantage of that opportunity to reach out and market the cards a little harder then maybe they have been in the past," McHenry says.
Consumers, however, are not the only ones who are feeling a pinch at the pump. Higher fuel costs have resulted in higher interchange fees for gas station owners, including some who have gone so far as to stop accepting credit cards.
Gas retailers pay the interchange fees to their customers' financial institutions every time a credit card is used. The amount of the fee, which is usually about 2%, is based on the amount of the transaction. So as consumers spend more on gas, the gas station owners pay more to process the transactions.
The National Retail Federation has been lobbying for lower interchange fees for years, but the issue gained traction in recent months as gas hit the $4 mark, says J. Craig Shearman, the group's vice president of government affairs.
On average, an interchange fee of 2% adds eight cents to the cost of a gallon of gas, Shearman says.
"The more money the gas companies make, the more money Visa Inc. and MasterCard Worldwide make," he says.
Issuers have tried to provide some relief to gas retailers. MasterCard has capped interchange fees on credit and debit fuel transactions "of about $50 or more," the company says in a news release. Visa also has capped interchange fees for debit card transactions at .95 cents and lowered the rates applied to credit cards.
"While Visa cannot lower the price of crude oil, there are things we can do to help make the process of buying gas easier for our cardholders, Bill Sheedy, Visa global head of corporate strategy and business development, says in a written statement. "And by lowering our rates, we hope to see oil companies pass these savings along to their stations and ultimately to consumers,"
Despite the changes, Shearman says the interchange fees nullify any cost-savings consumers receive from using gas cards because they are included in the purchase price, he added. "The cash back on a gasoline card is really fiction," he says. "They are driving up the cost of what you purchase on the card. It's like that old saying, 'There is no such thing as a free lunch, and there is no free tank of gas.'"
