Are Gas Deals Worth It?

Everywhere you turn these days there are offers to lower the price of gas at the pump. From credit card companies to car manufacturers, everyone wants to help you take some of the pain out of pumping your gas. But are these deals really worth it? Bob Sullivan of the blog "The Red Tape Chronicles" describes some of the potential pitfalls associated with gas price specials.

Chrysler's $2.99/Gallon Gas Deal

The first offer he tackles is the Chrysler $2.99/gallon gas promotion where the company promises to keep your gas prices locked-in at $2.99/gallon for three years if you buy one of their new cars. Chrysler operates this promotion by offering you three choices. You can either choose an instant rebate of $1,500, a special low-interest loan or the $2.99/gallon gas special. Sullivan calculates the possible savings associated with the low gas deal with the scenario of a car that gets 20 MPG, with gas prices set at $3.99/gallon and with Chrysler's 12,000 mile/year cap on the gas price. This would save the consumer $1,800 over three years. It seems like a great deal, but if you calculate the savings in interest payments by taking the initial $1,500 rebate or the low-interest loan, the deal is essentially neutralized. Consumer Reports did their own calculations where they compare the savings available by buying non-Chrysler cars without the deal HERE.

Jeff Bartlett of Consumer Reports says this about the Chrysler deal, "After three years, where are you going to end up? With two disappointing scenarios. Either you go back to paying full price for gas, or you say, 'I bought a gas guzzler, how am I going to sell that?' " The resale value of low-mpg cars is sure to plummet as gas prices rise, he said, so it's important for the consumer consider the total cost of ownership -- including resale value -- when considering any sales incentive.

Credit Card Deals

The next gas promotion deal Sullivan picks apart is the special credit card promises of lower gas prices. According to Sullivan, many of these credit cards, available at gas stations, offer rebates for your gas savings. The rebates are very slow in coming and merely knock down the amount you owe on the credit card rather than arriving as a check for the amount of the rebate.

In addition, most of these cards offer a teaser discount rate for a very limited time. Once that time has expired, the discount drops to an insignificant amount and eventually disappears. For example, the Citi Dividend Platinum Select Card offers a 5% gas discount for the first six months, which drops down to 2% after that. Add to that caps placed on the amount you can save and minimum purchase requirements and the deal gets more and more complicated. Some cards even restrict which gas stations you can purchase the gas from.

It is possible to save some money using these cards if you carefully map out the restrictions and the offers. The key is to make sure you pay the card off each month or else the interest payment will erase any savings at the pump.

Misc. Offers

Credit card companies and car manufacturers aren't the only ones looking to get your business by allegedly saving you money at the gas pump. Rental car companies are trying this tactic too. Several rental car companies are a free tank of gas as a reward for renting their cars. Sullivan says to watch out though as many of the cars they're offering with these deals are unwanted SUV's.

Some local tourism boards and several travel websites are offering gas gift cards in exchange for visiting. Obviously the thing to be cautious about is spending money where you weren't planning on spending it, or spending more money because you think you're getting a special deal.

Finally, even the grocery stores are getting into the gas price game. Kroger is offering shoppers 10 cents off per gallon of gas when they spend $100 on groceries. Of course your gas savings will be useless if you are spending more than you budgeted at the grocery store to get those savings.

Sullivan says to use common sense when you are considering these and other gas cost savings ideas. He says most consumers will travel a little further to get cheaper gas, only to waste the savings on the extra travel. Looking at these deals with a suspicious eye and carefully outlining the requirements is your best bet to avoiding being taken when you think you are saving money on filling the tank.

You can read the full blog post HERE.