Tuesday, May 8, 2012

Pay for Your Gas with Cash

While it may be difficult to fork over $50 for a tank of gas, sneering at the gas attendant won’t have any effect on rising prices. Station owners are barely turning out profits, as they are losing most of their proceeds to nasty credit card swipe fees. You may have noticed that many gas stations are starting to offer lower cash prices than credit card prices. While you may think this is merely to inconvenience you, you might want to consider taking heed of these discounts. By paying with cash or debit card, you are benefiting both yourself and these small business owners.

Recent Findings
Recent data from the Merchants Payments Coalition (MPC) has revealed, as gas prices increase, station owners lose more money, since credit card swipe fees are based on purchase percentages. This means, while we pay more and gas stations lose more, big banks collect big.

According to The Oil Price Information Service, in order to be competitive in the gas industry, gas providers typically lose about 2 cents per gallon per quarter. While these small business owners are losing, big banks are earning approximately 2-3 percent of each credit card purchase of gas, via swipe fees. So whenever gas prices go up, banks bring in higher profits without any additional effort. This comes to an added seven to ten cents per gallon for the consumer. "They (big banks) want to convince the public that gas stations are sitting on a windfall," said Lyle Beckwith, senior vice president of government relations at the National Association of Convenience Stores and MPC member. "In fact, many didn't even turn a profit last quarter in this hyper-competitive business."

The Loophole
The Federal Reserve may have made some efforts to thwart greedy bank practices by instituting a cap on high debit card fees, but they still have some cracks to fill. As the Federal Reserve's law did not include any mention of credit card swipe fees, many banks are replenishing their debit card fee losses with even higher credit card swipe fees (which are oftentimes hidden fees). It is crucial for the government to recognize this loophole before big banks run both our gas stations and our wallets dry.

Swipe Fee Statistics
The highest cost for gas retailers is labor, the second highest is hidden swipe fees. These fees, initiated by Visa, MasterCard, and other major banks, generally take approximately $2 out of every $100 spent on credit cards. As Americans, we are especially susceptible to this practice, as US consumers pay the highest swipe fees worldwide.

The price of gas increased 80% from 2004 to 2011. The price of credit card fees went up 180%. Of interesting note, during this time, the cost of providing electronic swipe transactions decreased considerably.

So the next time you complain about rising gas prices, don't blame the gas station owners. Remember, gas stations are small and often family-run businesses. According to Robert Fisher, who co-owns several Chevron gas stations and convenience stores, across Arizona, Oregon, and Washington, with his father, brother, and sister, "There have been times in the past month when I've been losing money for every gallon of gas I sell… It’s a very tough industry." So the next time you fill up, consider the Robert Fishers of the world over the big banks. Pay with cash or debit card to avoid hidden fees for you and the retailer.

This is a guest post. The opinion expressed is that of the sponsor.

Tuesday, May 1, 2012

How Much Do You Make?

That is the question that everybody would like to know the answer to, but nobody wants to ask. I mentioned before how readers are innately curious about other people's net worth. I think this is because of people's natural curiosity -- wanting to assess how one is doing compared to others. When you read new blog or meet somebody new, do you ever wonder how much they make?

So, how much do you make? I have asked this question before, and I'm asking again. Since I write an anonymous personal finance blog, that gives me the unique luxury of being able to ask the question without personally offending anybody.

So the last time I asked, I received a few responses such as these:

married female, 30 years old (husband is 30 years old). both of us completely self made professionals with degrees from state schools. rental income is approximately $60,000. combined household income is approximately $200,000.

Male, Married,Age 29 and 28, both MSEE, both work for the same company, combined salary 240k. Networth 273k.

Male, 41, divorced. $145k AGI Net worth is low due to student loan debt load but 401k is maxed and I'm killing the loan too.

married Male, 42 275K + 50K options. Retail, networth 1.4MM wife unemployed, 1 child

Now, do you care to add your own comment on how much do you make?

Note: Anonymous comments are welcome. (I want to assure you that Blogger does not collect Email addresses or any other personal information, if you select "Anonymous" on the comment form.) See also the annual income poll in the sidebar of my blog.