Credit Cards May Hurt Gas Prices in the Long Run
October 6, 2008
For the vast majority of Americans, having a credit card is a way of life. From shopping at retail to dining at restaurants, credit cards rule the economic landscape. Customers benefit by not having to carry cash, and the companies that issue cards make their money by means of charging businesses merchant fees in the form of a percentage that is taken from the total of a sale.
Normally, the percentage is pretty nominal in itself and does little to affect business profits. In tougher times, such as the current struggling economic climate, however, businesses have to handle the rising costs of consumables while dealing with the pressure a cut out of their profits causes them. In the case of gas stations, this cut is starting to become unbearable and may eventually drive gas prices higher.
Some gas stations are raising prices in order to maintain a steady profit, but many others are still unwilling to risk the move due to fears that it will hurt their competitive value in the market. Others still are unable to change their prices at all due to contracts with the gasoline suppliers, and so they end up having to absorb the hit in their revenue.
Paul Fiore, VP of SSDA-AT, or Service Station Dealers of America and Allied Trades, has spoken out on the concerns of gas stations by mentioning that this issue could very well be the final burden that leads many gas stations to close. Although the closure of gas stations is not yet a wide-spread issue, he believes that the rising costs of gas combined with the negative impact that credit cards are making may very well lead to many more businesses closing shop.
In effect, if that were to happen, fewer gas stations would mean that there would be less competition overall, which would allow the remaining stations to charge higher prices for their gas. This hasn’t happened yet, but Fiore believes that it could be a possibility.
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I recently have had some credit problems. I liked my credit cards waaay too much. I think the best thing you can do to recover is to allow yourself enough time to straighten everything all out. Nothing happens overnight, especially fixing a credit score.