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The cheapest gas stations here all charge 10 cents a gallon more for credit transaction.
I could $3.29 a gallon (debit/cash) at Safeway or Costco (Costo does not even take credit unless you have their card which does not off rewards on Costco gas) or I could pay $3.39 for credit (Safeway). Alternatively most Chevron stations don't charge for credit transaction, but they're usually 30 cent a gallon more expensive. I get 3% off on gas, so there's no advantage to using it for gas. I use it for security reasons since it's the same price after the cash back. Most people do not have 5% back, more like 1-2%, unless it happens to be the rotating category for the quarter making it marginally cheaper to use debit/cash. It's more that I'm lazy and don't want to go in the store than the cost.
I buy my gas at Costco all the time. You are correct, at least in my state, that Costco only takes its own Costco credit cards (which are American Express-issued) at its gas pumps. You are wrong, however, to say that Costco does not offer rewards on its credit cards. As it says on Costco's website, I get "3% on the first $3,000 in eligible purchases each annual reward period (1% thereafter) of gasoline (individual purchases of 75 gallons or less) at Costco."
There are other monetary rewards for using the Costco credit card. Among them are a 2% rebate of restaurant and travel-related purchases (hotel bills and such) and 1% of everything I purchase at the Costco warehouse stores. I get this reward annually in the form of a coupon that I can redeem for goods at the warehouse or cash. I always get the cash and go across the street to my bank and deposit it in my savings account. I pay my card off each month, so there are no interest charges. I understand the rewards are larger for Costco/AmEx business accounts, but I don't purchase enough to warrant my having one of those.
I also would like to say I'm shocked that it took until page four before anyone mentioned the use of skimming devices on gas pumps. These are becoming more and more prevalent, especially at gas stations that are not in busy places. It's especially dangerous to use a DEBIT CARD in paying for gas because of these devices. Go to the wrong place and a criminal could empty your entire checking account before you get home from the gas station. Same with skimming devices on ATMs. Very dangerous. But at least if you are using a CREDIT card, rather than debit, you have some protection from the theft. Even though pay off my two credit cards every month, I charge almost everything I buy. I don't like to carry cash. I've had my purse stolen twice in muggings and my house was robbed once. Had I kept a lot of cash, the damage to me would have been even worse than it was.
And I usually "shorten" them, buying perhaps $18 worth of gas, plunking down a $20, and leaving $2 for the coffee machine at work.
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