Ouch, why the different prices when using plastic instead of cash? I thought 3.45 was bad.[/quote]
Well, because of a couple things. As Pitt is unaware of apparently, the people that own the gas stations are Mom’s and Pop’s. They have to buy the fuel from distributors, who buy their fuel from other bigger distributors and refiners, etc.
Sorta like a drug dealer. Follow me?
Okay, so now these dudes and ladies who own the station have 3-5 days to pay their distributor because the distributor has 7 days to pay his supplier. When times are booming, people are lax on the payment terms and you can be a few days late. Now, during the shit economic times we have now, people are hard line on the time to pay.
Cash goes right in the nightly deposit, credit card companies send cash a couple days later.
That is reason #1.
Reason #2 is the credit card companies charge the retailer (dude selling gas) 2-3% of every dollar as a fee. So, if you spend $100 to fill up, the gas station only get $97 of cash, 3-5 days later. So with prices near $6 a gallon people will shop around. This means dude needs to keep his prices as close to his costs as possible. But if he is losing 3% of every sale to the credit card company he needs to up his price.
So the difference in cash prices gives people the incentive to hit the ATM before coming to buy gas, because cash works better for him. But the credit price is high enough to keep it work the float and fee, and also not too high as to scare people away.