Fuel duty may have been cut, but you could still be overpaying for petrol. Robert Powell reveals why...
In the history of Budget sweeteners, George Osborne’s cut in fuel duty is a pretty sour one.
A penny may have come off the price of a litre of petrol, but has anyone really seen the cost change at the pump? I think not.
And unfortunately, inflated pump prices are not the only overpayment trap that motorists are falling into...
Fuel is flying!
The cost of filling up a tank has shot to such lofty heights that many motorists are now using a credit card to pay for their petrol. Indeed, half of the people surveyed in a recent Equifax poll admitted to using their flexible friend to pay for fuel. But this can have expensive consequences if – like 50% of the plastic-using motorists that Equifax spoke to – you don’t pay off your credit card bill in full every month.
Robert Powell hits the streets to bust these credit card myths
In fact, Equifax estimates that 10% of these motorists are only paying off the minimum on their credit card bill every month, while 18% are clearing off less than a quarter of their balance each time a bill drops through the door.
Failing to pay off credit card balances accrued at petrol stations is one sure way of upping the amount you eventually pay for your fuel, as you’ll also be shelling out to cover interest charges. The longer you leave your credit card debt alone accumulating interest, the more you’ll end up paying for your petrol.
But fuel isn’t the only bill that we rely on credit cards to foot.
Credit reliant
Further stats show that 91% of the people surveyed have at least one credit card, while nearly a third have two and over one in five rely on three separate cards. Looking through the regional spending stats, no geographic trends are immediately obvious but what does stand out is the extent to which many people now rely on credit cards.
Over two thirds of those surveyed in London rely on plastic to pay for everyday living expenses while 68% of the Welsh poll participants need their credit card to pay for fuel.
Take a look...
|
|
London |
North East |
North West |
South East |
South West |
East Anglia |
Midlands |
Scotland |
Wales |
|
Petrol or diesel |
43.4% |
61.8% |
61.9% |
64.1% |
65.4% |
58.2% |
62.2% |
49.1% |
68.2% |
|
Everyday living |
67.6% |
64% |
56.7% |
69.8% |
63.2% |
61.8% |
60.5% |
55.8% |
60.6% |
|
Utility bills |
10% |
4.3% |
8.1% |
7.3% |
8.8% |
4.5% |
5.6% |
3.7% |
3% |
Source: Equifax
What’s more, almost a quarter of the people surveyed had an outstanding balance of between £1,000 and £5,000. Keeping a debt of this size on a card for too long will add a considerable amount to your monthly outgoings in the form of interest charges.
But it doesn’t have to be this way...
Credit cards with petrol perks
The best way to cut the cost of your fuel bill when paying by credit card is to get your hands on a cashback, rewards or 0% purchase card. Cashback credit cards will pay you back a percentage of what you spend in either cold, hard cash, while reward credit cards will give you reward points. Just make sure you set up a direct debit to pay off your balance each month or else the interest charges will more than offset the money saved through the cashback or rewards.
Another option is to go for a 0% purchase card. These accounts won’t charge any interest on your purchase balance for a set number of months – giving you a longer time to pay off your credit card burden.
Here’s some of the best cashback, rewards and 0% purchase cards that are around at the moment:
|
Card |
Purchases |
Representative APR (variable) |
Perks |
|
N/A |
18.9% |
1.5% cashback on supermarket/petrol, 0.75% on everything else |
|
|
N/A |
18.9% |
1.25% cashback on supermarket/petrol, 0.50% on everything else |
|
|
0% for 10 months |
16.9% |
Earn reward points (double points for fuel, motoring purchases) to spend on motoring products and services, AA insurance or vouchers |
|
|
0% for 13 months |
16.9% |
Earn double Clubcard points when you buy fuel from a Tesco filling station |
|
|
0% for 15 months |
15.9% |
Earn M&S Reward points for your spending. |
|
|
0% for 6 months |
19.9% |
5% cashback in first 3 months up to £100, up to 1.25% (tiered – min spend £3K) after that with no limit |
If it’s straight cash you’re looking to earn back from your petrol pump purchases then the best bet is the Amex Platinum, which pays an unbeatable 5% cashback for the first three months (up to £100)., followed by a tiered offering depending on how much you spend.
But if you don’t fancy getting any of these cards, here’s five other ways to cut your petrol bill.
Shift it!
Alternatively, if you have a hefty slab of debt currently sat on your credit card, getting hold of a new 0% balance transfer card may be a good idea. These cards will take your debt and hold it for several months at 0% - giving you a longer period of time to pay it off before you start getting charged interest.
Here are the current market leading balance transfer cards:
|
Card |
Balance transfers |
Balance transfer fee |
Representative APR (variable) |
|
0% for 20 months |
3.2% |
17.5% |
|
|
0% for 18 months |
2.88% |
16.7% |
|
|
0% for 18 months |
2.89% |
16.8% |
|
|
0% for 18 months |
2.9% |
16.9% |
|
|
0% for 17 months |
2.95% |
15.9% |
Just remember, all these cards will charge you a fee when you initially make the transfer – so it’s not really 0%! Read Eight tips to clear your credit card debt for some more advice.
More: Compare credit cards with lovemoney.com | The 20 month 0% credit card! | How 0% credit cards cost you money