Tag Archives: credit cards

Saying goodbye to our awesome gas rewards program *sniff*

With gas prices pushing $4, I knew it was only a matter of time. And now it has finally happened. Our amazing gas rewards program will soon be no more.

For the past 4 years, we’ve put all fuel purchases on a branded credit card. We always had to fill up at the same station, but in return, we received 5% cash back rebates for fuel purchases. I loved the cash back, and paying for gas in one bill every month simplified our budget, so it was win-win.

The letter we received outlined a new “rewards” program. It’s incredibly confusing, but from what I can gather, it seems like for every $100 we spend, we’re given the opportunity to fill up a single tank at a 15-cent-per-gallon discount. The discount accumulates with each $100 we spend. If we accumulate a $1-per-gallon discount (after spending $700 on gas), we can request a $15 statement credit. It shakes out to roughly 2% cash back if we continue to buy gas from this brand and choose the statement credit option.

The thing is, it’s not convenient for us to use this particular gas station anymore. When we first bought our house, the closest gas station happened to be this brand — it was literally right around the corner. Right around Christmas, though, the location suddenly closed. To keep getting our 5% rebate, I was driving clear across town every time I filled up. Without those rebates, it’s not worth the hassle.

We may eventually close the credit card. Since it’s not the first credit card for either one of us, it won’t shorten our credit history. As long as we increase our limits on other credit card accounts to account for the lost lending power, it should have minimal impact on our credit score. For now, though, I think we’ll just stop using it.

I still like the system of paying for gas in one lump sum every month, since that’s what we’re used to. I don’t want to open another credit card, though. So I started exploring my options.

There is another gas station around the corner from our house that offers a reward program. It’s a punch card, and we’ll receive a discount of 5 cents off per gallon for every 100 gallons we pump. I’ll take it!

Next I had to figure out which credit card to use. I looked at the rewards for the credit cards we currently have, and I wasn’t impressed. Each of them offered some kind of rewards program, but it’s one of those deals where you get a point per dollar, and then redeem 5,000 points for a $5 gift card or something. In other words, not a great deal.

There are other cards out there with better rewards, but that would require opening another credit card. So I did some more hunting, and found that American Express has a pretty decent cash rewards card with no annual fee that offers 2% cash back on gas. Since we already had an American Express card, I wondered if I could just switch my account to the cash rewards card without opening a new card. A quick phone call was all it took to make the switch. It’s obviously not as great as our flat 5%, but it’s the best deal I could find without opening a new account.

It’s about the same amount of money that we’d receive if we continued using our current card and bought gas from that brand. The benefit of switching is that we’ll get the reward for buying gas at any gas station, so we’ll have more freedom.

Our plan now is to put all gas purchases on the cash back card, and pay it off every month to avoid interest just like we’ve been doing all along, of course. (Remember: the rewards program isn’t worth it if you’re paying high interest rates or an annual fee.) We’ll also use the reward program at the gas station near our house for fill-ups at home. The bonus to this new system is that we’re no longer required to use the same gas station to get our rebate. This will make things much easier when we’re traveling since we won’t have to hunt for a certain gas station brand, and it will also allow us to price compare and fill up at cheaper stations.

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How much is laziness costing you?

I’ve mentioned before that Tony and I use a credit card to purchase all of our gas. We pay the bill off every month before it accrues any interest, and we get 5% cash back on all fuel purchases. Since we’re not paying interest, the 5% cash back is basically free money, and keeping an active credit line is important for building and maintaining a good credit score. It’s win-win.

The credit card is through BP, and we only get 5% cash back on BP purchases, so 99% of the time we buy gas at BP. We only buy at another gas station if the cost per gallon is less than we pay per gallon with the 5% discount. Makes sense, right?

At the beginning of December, we started seeing signs at BP gas stations for a new rewards program. Fill up five times, and you receive a $10 gift card. Since we fill up at BP 99% of the time, it should have been a no brainer for us. Enrolling in their loyalty program would net us up to three $10 gift cards for 15 fill-ups in addition to our 5% cash back.

The only catch? You have to print a receipt and take it inside to the cashier to get credit for filling up.

I’m ashamed to admit that we didn’t start participating in the program until last week. It’s the end of January, and we’ve only gotten credit for two tanks of gas even though we did more driving in the month of December than we’ve ever done in a single month. We probably could have already received the $30 worth of gift cards considering all the gas we used last month with holiday travel throughout the state and the move.

The truth is, I saw the signs every time I filled up, and the only reason I didn’t take advantage of the promotion was laziness. It was cold, I didn’t want to drag the baby into the gas station, I was in a hurry and didn’t want to go inside. It was easier to pay at the pump and get on my way, so that’s what I did. But it cost me. We easily would have filled up 15 times in three months, but we probably won’t fill up enough in the next six weeks to receive all three of the $10 gift cards we could have gotten.

Granted, in the weeks after a newborn arrives, I think it’s easy for even the most frugal person to be lazy about saving money. But it’s unlike me to turn down any offer for free money, and that’s basically what I did by putting off participating in this promotion.

I see this type of thing all the time from less frugal people, too. Sometimes it’s easier to pay twice as much for an item at a gas station when you need it than it is to go to the grocery store where prices are much lower. Millions of people would rather pay higher prices for groceries across the board than clip coupons and hunt for deals. Many people spend hundreds of dollars a month on takeout because it’s easier than cooking every night.

Laziness is a harsh word, and I don’t think it applies in all cases. When time is limited, I think it makes sense to value your time over the money you could save sometimes. But my point is, how often do we choose the easy way when just a little bit of effort could save us a lot of money? If you’re taking the easy way out most of the time, you could be costing yourself a fortune.

It’s a question I’m asking myself a lot lately as we adjust to earning a higher income than we’re used to. I don’t want to be lazy about our finances. When you have a little extra money, it’s tempting to take the easy way out, but I’d rather work a little harder to save even a few dollars if that means building our savings and reaching our goals faster.

So it’s confession time: how often do you let laziness keep you from saving money? Think about it, and consider just how much you could save if you made a little extra effort in those situations the majority of the time. It could mean paying off your debt sooner, building your savings faster, going out to dinner once a month, or even taking a vacation once a year. When you make the extra effort to save most of the time, those dollars and cents add up quickly.

Overseas transaction fees give me a headache

credit cardsWe’re not going to start booking until January at the earliest, but right now we’re doing a lot of research for our trip to Europe in May. That means we’re tracking airfare, putting together a loose itinerary, and researching the logistical aspects of traveling to another country.

One of the biggest headaches of traveling to another country is money. The last thing we want to do is carry all of our money in cash. A lost or stolen bag could be catastrophic. Taking cash out of an ATM is expensive, so we also don’t want to withdraw a daily cash allowance. Traveler’s checks seem like a hassle, but using a debit card or credit card will result in wasteful overseas transaction fees.

We’ve determined that the best way for us to handle money will be to carry a small amount of cash in the local currency, and then use a credit or debit card for the rest of purchases. We’ll have cash saved for the trip, so we’ll pay off the credit card immediately when we get home, but we don’t want to be stuck with ridiculous overseas transaction fees.

What are overseas transaction fees?

Here’s how it works: If you use a debit or credit card in another country or with an international company, you pay a transaction fee of 2-3% to the bank. On top of that, you’ll pay another 1-2% transaction fee to the credit card company backing your card (Visa or Mastercard for example). These fees are in addition to any applicable sales tax on your purchase.

Check out this CreditCards.com article for current transaction fees on popular credit cards as of June. Here’s what we’d pay for cards we currently hold:

  • American Express: 2.7%
  • Bank of America: 3%
  • Wachovia debit card: 3%

If we spend $4000 total on hotels, food, and other expenses overseas, we’d be paying a total of $108 to use the American Express card. American Express is only accepted on a limited basis, so we might end up having to use our Visa Bank of America card or Wachovia debit card, which would cost $120 in fees. That may not sound like a lot, but we could do a lot with that money in terms of food or entertainment. If there’s a way to avoid paying it in fees, I’d like to try.

If we withdraw cash every day, we’ll pay $5 per ATM transaction plus 2.7%-3% for purchases we have to charge, like hotels. That’s $60 in ATM fees over 12 days, plus a fee to the bank that owns the ATM for each withdrawal (usually $2-$3) for a total of $96 minimum. It’s also likely that we’d pay $2 per transaction to Wachovia, bringing the total to $120.

How can we avoid fees all together?

Capital One is the only company that doesn’t currently charge overseas transaction fees. Capital One doesn’t charge a fee, and they even waive the fee imposed by Visa or Mastercard. We don’t have a Capital One card, so we’d have to apply and open a new account just for this trip.

So I’m torn. We’d pay off the balance immediately when we return home, but still. I don’t know how I feel about opening another credit card for this trip. Is it worth it to save a little over $100? When I think about spending $5000 on a vacation, $100 seems like chump change, but then I think about what we could do with that money in Europe. On a frugal vacation budget, $100 can do a lot.

My other concern is with the changes happening in credit card companies, it’s possible that Capital One will suddenly start imposing overseas transaction fees.

Like I said, we won’t be booking anything until January, which means we have a few months to wait and decide. But even if we apply for the card and book our hotel in January, that doesn’t mean Capital One won’t suddenly start imposing a fee before May. Then we’ll have a new credit card for nothing.

What do you think? Is opening a new credit card worth possibly saving $108-$120, or should we just suck it up, use one of the cards we have, and factor the fees into our budget?

Photo by andresrueda