Credit Card Fees Up Gas Prices

To cover their fees, gas stations raise gas prices for credit card customers.

July 9, 2008 — -- Many Americans have taken up a new hobby -- hunting for the gas station with the lowest prices. But the hunt has gotten exponentially harder as the price of oil has skyrocketed and the posted price may not even be advertised, especially if the consumer wants to pay with a credit card.

To combat the hefty fees that card companies are charging gas stations, many owners have passed the costs on to the consumer by charging more per gallon if the payment is made with plastic instead of cash.

The card giant Visa, for instance, typically charges a 2 percent fee for each credit card transaction to the station owner. If the price of a gallon of gas is $4.11, that translates to about 8 cents a gallon, which is then passed on to the consumer who pays with a credit card.

But sometimes, as ABC's New York affiliate found, some gas stations take the opportunity to charge even more exorbitant increases -- as much as 50 cents per gallon.

"It's a typical bait and switch," AAA spokeswoman Michele Mount told ABC News. "You lure them in with an attractive price that could be lower than their competitors, and then you hit them up with harder credit card fees."

But increased profit from credit card customers is not the only reason to raise prices for those who pay with plastic. As more people use cash to save at the pump, they are forced to come inside the store to pay, which creates another opportunity for the gas station owner.

"Because while you're in there, you're going to also pick up a coffee, a soda, maybe even a sandwich," Mount said.

Faced with a hefty fine for taking advantage of credit card customers, one gas station owner was forced to either display both prices or charge a flat fee. He reluctantly chose the later, and now he says there is "no benefit to cash customers anymore."

Consumers can take some basic precautions to make sure they are not being charged too much at the pump by going to gas stations that display both prices and by asking whether credit cards pay more, then checking the receipt against the pump meter.