Are Credit Cards With Gas Incentives Bad For The Environment?
Why do Americans consume so much gas? Well, there are a lot of culprits we can blame… poor fuel efficiency standards, underdeveloped public transit, low taxes on gas, bad politics, and the list goes on. Probably the last thing that comes to mind are credit cards. But the truth of the matter is that there are numerous gas credit cards on the market that give higher rebates on gas… they are actually rewarding consumers for using more gas. Does that make common sense? Is that something we really need to be incentivizing?!
As much as we hate paying an arm and a leg at the pump, the honest truth is that it seems to be one of the only surefire ways to reduce consumption. Do you remember a couple years ago, back in 2008, when gas prices hit $4 to $5 per gallon? What happened was that people started driving a lot less! It also spurred a slew of gas discount incentives from savvy retailers. Many stores would throw in a free gas card when you spent a certain amount of money on a big ticket item. Auto manufacturers had “guaranteed” gas price incentives on new vehicle purchases. Meanwhile the crafty credit card industry ramped up their own programs, by using gas rewards as an incentive to try and get consumers to spend more on their credit card.
Many feel that giving any kind of rebate or discount on gas is only going to encourage consumption. They argue that we will never be able to end our oil addiction as long as we have cheap gas. However Michael Davis of CreditCardForum.com believes differently, “Back in the summer of 2008 during the price spike, we saw applications for our gas credit cards surged. The Discover More card, Chase Freedom card, and ATT Universal card were the three most popular credit cards on our site, simply because they offered the highest rebate on gas. But if you read the comments on our credit card forum, you would see that the only reason people were applying for them was because they literally could barely afford the gas to simply drive to and from work, so it was a way for them to save a little money. Trust me, people weren’t applying for these credit cards so they could drive more. They were just doing it to get by.”
While Michael does have a couple valid points, the bottom line is that these credit cards with cashback on gas without a doubt did encourage at least some people to drive more, even if it was only a minority of users. Furthermore, he fails to mention the fact that the credit card processing costs that gas stations have to pay can be anywhere from 3 to 5%… so at the end of the day his belief that these credit cards save us money is just plain wrong. And last but not least, they will also encourage some people to run up debt, do balance transfers, etc… all just for a tank of gas! So if they’re not actually saving money (as I’ve demonstrated) that brings us back to the original question… are gas credit cards bad for the environment? Well, I don’t think it would be a total stretch to say that they are!
