The fuel surcharge rate on credit cards can impact the cost of using it and can also reduce your savings. If you regularly fuel up your vehicle, you can ease the surcharge costs using the right card for your payment. Many issuers now offer a waiver for a surcharge, which can help ease the burden and increase your savings.
Before you get a credit card, understand what the surcharge rate is and how it affects your finances.
What is the Fuel Surcharge on Credit Cards?
Here is a brief overview of the fuel surcharge rate on credit card:
- It is a fee that fuel companies impose on transactions you make at fuel stations using a credit card
- It is generally a percentage of the total fuel purchase amount and covers the cost of transaction processing charges
- However, the specific rates and mechanism of fuel surcharge rates may vary across different credit card issuers and fuel stations
- You will have to pay a GST of 18% on the surcharge fee
Consider this example: If the fuel surcharge rate on your credit card is 1% and you purchase petrol worth ₹1,000, the charges will be ₹1,000 X 0.01, i.e., ₹10. Adding 18% GST (₹1.8) will bring the total amount payable at the fuel station to ₹1,011.8.
How the Fuel Surcharge Rates Affect Credit Card Usage
The fuel surcharge rate on credit cards can have a multifaceted impact on the card. These include:
Higher Expenses
- The primary effect of the rate is that it adds up to the total cost of your fuel purchase
- With rising fuel prices, even a small portion of your total fuel purchase can cost you significantly at petrol stations
- This additional cost can even discourage some users on tight budgets from using their credit cards for fuel purchases
Increases the Cost of the Rollover Balance
- High fuel surcharge can also indirectly impact the cost of your rollover balance over time
- If you tend to regularly use your card for fuel purchases, it can potentially add up to your current balance
- A higher credit card balance translates into a higher bill when you receive it at the end of the monthly cycle
- Failing to pay the entire credit card balance will result in interest charges accruing on the rollover balance
Impacts Budget
- If you like to stick to a strict budget, fuel surcharge rates can complicate your planning for fuel expenses
- Proper budgeting becomes challenging because of these unpredictable costs over and above the fluctuating fuel prices
- An absence of a clear and well-chalked-out budget can lead to overspending or difficulties in your finances for refueling
Cancels Out Rewards
- A fuel surcharge rate on credit card is an expense on a fuel transaction
- Hence, it doesn’t contribute to earning reward points or cashback when you use your card at a fuel pump
- A high fuel surcharge rate can also offset the benefits you get using the credit card at different merchant stores or other types of transactions
Waiver on Fuel Surcharge on Credit Card
Certain credit card companies offer fuel surcharge waivers, allowing you to avoid this additional cost on transactions at fuel stations. Here is how this waiver works:
- This waiver effectively eliminates or reduces the fuel surcharge fee levied when you refuel your vehicle.
- This feature comes in handy, especially for those who have to fill their tanks frequently
- Since some cards collaborate with specific fuel corporations, you may have to visit the designated fuel station to avail of this feature.
Check out some of the benefits of availing of a fuel surcharge waiver on a credit card:
- These waivers result in lower expenses on fuel costs over time, helping you offset the effect of rising petrol prices
- Lower expenses will mean a lower credit card balance, which will be easier to pay off
- You can even request your credit card issuer to increase credit card limit if you pay your dues on time
- These also simplify the payment process at fuel stations, as you don’t have to carry cash or worry about change
- These waivers can also allow users to refuel more frequently, which may lead to better fuel management, leading to higher fuel efficiency for your vehicle in the long term
If you frequently go for road trips or use your vehicle for commuting, ensure that you get a card that doesn’t burden you with an additional cost. To enjoy up to 5X rewards on the top two spends along with a waiver on fuel surcharge, get the One Credit Card.
You can enjoy other exclusive rewards and benefits, along with easy tracking of your spending with the powerful mobile application. Apply now to save more on fuel and other payments
