Crediting high gas prices

[PUGalicious]

This topic comes by way of fellow blogger, Okiedoke.

Buying gas on credit? Then you are contributing to high fuel prices at the pump, says Exxon station owner Paul O’Connell.

“The banks are making a killing,” said O’Connell, who is also executive director of the Billerica-based New England Service Station and Automotive Repair Association. O’Connell spoke to legislators yesterday during a hearing about gasoline prices for the Committee on Telecommunications, Utilities and Energy.

He said credit-card companies have increased fees for gas stations that allow customers to use credit cards to pay for gasoline.

O’Connell says the companies have doubled their fee from 4.5 cents per gallon to 9 cents per gallon of gas.

“The credit-card companies are making almost as much as the oil companies,” Dampolo said. “On our end, we mostly have a loss of profits. … Four years ago, I was making more money selling at 89 cents a gallon than I am today.”

But surely credit card companies alert you to that fact in your monthly statements. I know how big they are on encouraging responsible use of credit. Too bad it isn’t part of a disclosure provision in the new bankruptcy law. Oh that’s right, that law was for bankers only.

As I watched the gas prices going up again in the last day or so, I kept thinking that someone is making a killing from these rises and falls. I know it's not the gas station owners — they are the unfortunate business people caught in the middle, being squeezed by their suppliers, the marketplace (competition) and now, it appears, the credit card companies.

The credit card industry lobbied Congress heavily to get their legislation passed that made it more difficult for consumers to file bankruptcy because they claimed it was hurting their business. Ignore the fact that they too are making record profits, just like the oil companies.

Next time you hear a Republican congressperson or senator try to convince you that they stand up for the average American, don't be duped again. The policies in the last four-plus years continually support big business on the backs of their REAL constitutents — the American taxpayer. But that's a topic for another thread.

Anyway, you can add the credit card industry as another looter in this gas crisis.

[Karried]

Does an ATM Card count?

I filled up at Sam's Club yesterday morning 9/20 Tuesday $2.31 a gallon

[PUGalicious]

Does an ATM Card count?

I filled up at Sam's Club yesterday morning 9/20 Tuesday $2.31 a gallon

I don't know for sure, so I won't make a guess.

[windowphobe]

They don't know in advance whether you're going to slide a credit card or a debit card into the reader, so I'm willing to bet that the retailer is having to pay the higher fee for all cards. (This is consistent with other card practices I've had to look at over the years.)

[rxis]

There has been a lot of negative media coverage on cc companies lately. Come to think of it, our rates increased at about the same time Katrina occured.
We are actually locked in with the merchant at our bank because the bank provided the financing for the business and we have to stick with them until the loan is paid off.

Any business owners meet any of the shoddy "credit card merchants"? I've run into young guys trying to sell their services going from one shopping center to the next. I don't even know if there are any more new start-up merchants.

My dad's cashier told me that a customer actually voided a cc transaction 30 minutes after purchasing gas. I t even know how she did it, but the bank is supposed to be looking into it. I didn't even know that it was possible to void transactions like that.

[Patrick]

I wondered about this. I noticed that the locally owned Conoco at Hefner and May gives you a 3 cent per gallon discount if you pay by cash.

[windowphobe]

This could very well be a response to the higher cost of credit, although I expect that someone will probably complain about it. (Discounts for cash used to be fairly common, then they dried up; I suspect bank maneuvering.)

[Karried]

Hosed at the gas pump -- by your debit card
You may have topped off with just $20 worth of unleaded, but the debit-card transaction could freeze as much as $75 in your account, sometimes for days.

By Christopher Solomon

If you ever use your debit card to pay at the pump, watch out: Did you know that every time you top off the tank, a chunk of your checking account can be blocked -- sometimes for days, with the potential to cause you all sorts of financial headaches and bounced checks?

That’s what happened to Jessica Hathaway, a state employee from Allentown, Pa. Earlier this year Hathaway stopped during her commute to fill up her car at Rauch’s Mini Mart, a Shell station. She bought $22.29 worth of gas using her debit card.

The next day Hathaway balanced her checkbook using her bank’s telephone service -- and something didn’t add up. The bank said that she’d made two purchases the previous morning: one for the $22.29 and one for $75.

Trouble is, she’d only bought the gas.

Finally Hathaway called the service station, and an attendant explained to her what few people know.

How your money gets frozen
If you use your debit card at a pump that does not require a PIN, the station regularly will block out an amount -- often $50 or $75 -- on your card.

That amount doesn't “un-block” as you drive away. Instead, the hold remains until that evening, and sometimes for up to several days, until the station does a “batch” transaction, according to the U.S. Public Interest Research Group.


Each big oil company has a different policy:

• Shell places a $75 hold for gas purchases, and it can stay in place for as long as three business days.
• British Petroleum places a $75 hold on accounts when customers use debit or credit cards, but the hold is usually lifted after about two hours, said spokeswoman Sarah Howell. The same policy applies at its Amoco and Arco stations, Howell said.
• Chevron applies only a $1 hold to debit cards, to ensure that a card is active, says a spokeswoman.

The reasoning behind this policy is that oil companies don’t know how much gas you’re about to pump -- only PIN-based debit transactions are processed immediately -- and so they earmark a certain amount of your money. “We want to make sure that we’re protected, that we get payment for the gasoline,” says BP’s Howell.

This general idea isn’t new. Credit-card companies have done it for a long time. (Think of when you rent a hotel room or a car, and the attendant runs your card upon your arrival to ensure you can pay for it.) It’s less of an issue with credit-card owners, however, because you’re usually told that it’s happening and you’re probably not flirting with your credit limits.

If a company puts a chunk of dough in your checking account off-limits without your knowledge, however, it can cause real migraines.

•Find the cheapest gas prices in your neighborhood•••••
Consumer advocates say beware
Banks give conflicting accounts about what this means to you, the consumer.

Bank of America says that users of its debit cards won’t experience bounced checks if debit-card blocks disappear on the same day as they’re put in place. A spokeswoman for Wells Fargo agreed.

But the Wells Fargo spokeswoman, Linadria Porter, conceded things can get a little stickier if the block sticks for more than a day. “There is the possibility that you could bounce a check,” she says. If a customer calls and points out what happened, “most of the time we will give them back those fees,” says Porter -- but not always, she adds.

Consumer advocates say when in doubt, fear the worst.

“If there’s a block on your account and you have checks come in against your block, you could suffer bounced-check fees,” says Edmund Mierzwinski, consumer program director for the U.S. Public Interest Research Group, who says his and other consumer groups have received complaints.

It’s also unclear how off-limits your money is in other ways.

“Is the money technically unavailable? Yes,” says Chet Bridger, a spokesman for Buffalo, N.Y.-based M&T Bank, Hathaway’s bank. In other words, if Hathaway had gone to an ATM, she might not have been able to withdraw the cash, Bridger says.

The problem wouldn’t be so nettlesome if the blocks disappeared within even a few hours. But the $75 hold that appeared on Hathaway’s account on a Friday morning didn’t disappear until the following Tuesday -- five days later.

“I was just fortunate that I realized it, because if I had gone grocery shopping that weekend I would have been in the negative on my account,” she says. She thinks of the penalty fees she might have racked up. “And who would have paid then?” she muses. “Shell?”

“What really burned me up is not so much the financial aspect, but they didn’t ask permission,” she adds. “I wasn’t informed.”

Changing the policy?
Hathaway has complained to the Pennsylvania Department of Banking and to the Pennsylvania Attorney General’s Office, and to the mini-mart owner. To no avail, she says.

In fact, the policy doesn’t show much sign of changing soon, despite some legal support for consumers. In 2002, California Attorney General Bill Lockyer issued an opinion that said that gas stations need to tell customers about the debit-hold policy.

“If the hold extends beyond the time of purchase and covers an amount greater than the amount of purchase, then the hold has to be disclosed to the consumer,” says a spokesman, Tom Dresslar, summarizing the opinion.

Even so, Dresslar said his office was not actively pursuing any action against oil companies, and that he was not aware of any barrage of complaints by consumers.

How to protect yourself
How can you protect yourself at the filling station? Station owners and consumer advocates offer this advice:

• If you must use a debit card, pay inside where you can use your PIN number; PIN-based transactions are registered immediately.
• If you pay at the pump, use a credit card.
• Oil companies' proprietary charge cards often don’t have any kind of block feature on them, but not always. Chevron, for example, briefly blocks out $18.
• Good old cash is still good -- and many gas stations, tired of paying high credit-card fees, now give a discount of up to a dime a gallon for cash. Look for such deals.

Finally, says Dennis DeCota, executive director of California Service Station & Automotive Repair Association, don’t blame the gas station owners for this policy.

DeCota, who has owned a 76 gas station in San Anselmo for 28 years, says he has seen the contracts between service-station owners and oil companies, and says that big oil companies set the amount of the hold, and their merchant banks set the duration.

If DeCota had his druthers, everyone would come inside to pay, where they’re more likely to buy a bag of Corn-Nuts and a Coke with their fill-up.