Cash or Credit Card for Heating Oil?

In many respects, heating oil is an old, dirty business. There has not be a ton of innovation in the heating oil space. Until recently, that is. With the advent of the Smart Oil Gauge, and online buying platforms like FuelSnap, ordering heating oil is now a lot easier than it’s ever been. And with special credit card rates for heating oil dealers, cash heating oil prices are very rarely any better than credit card prices!

Speaking as a millennial, I almost NEVER have a lot of cash on me. I actually cannot think of the last time I’ve used cash, outside of tipping at an open bar during a wedding.

In this post, we dig into why paying cash for heating oil will likely be a thing of the past somewhat soon.

Cash Discount for Heating Oil

For many small businesses, credit card processing comes at a price. The price typically hovers around $0.30 per transaction, plus 2.9% as a processing fee. The ‘cost’ of this, however, is made up for by more people stopping in and making purchases. My favorite deli in Ridgefield didn’t take credit cards until just a few years ago. Since I virtually never had cash on me, I would just drive up the road to my second choice whenever I needed lunch. Now that they do take credit cards, I’m there all the time, without hesitation.

What’s interesting about heating oil dealers is that they are not subject to the same 2.9% processing fees that traditional merchants pay. This is because heating oil is treated by credit card companies as a ‘Utility’ (think gas and electric). Because people need to keep their houses warm, they need flexible payment options. Fortunately, through some lobbying, credit card processors charge heating oil dealers a significantly lower fee. All in, the fee comes in at just above 1% on average. As a result, there’s not a huge difference between the cost of taking cash vs. credit card. In fact, if you factor in the trips to the bank, it actually costs more to take cash. With this in mind, very few dealers want to take cash any more.

Credit card processing for heating oil dealers only costs about 1.1% on average. As a result, the cost of processing credit card orders is minimal when compared to the costs of carrying, counting, and depositing cash on a regular basis.

Pros and Cons of Paying Cash for Heating Oil

As a consumer, you are always more protected when making a purchase with a credit card than cash. And given the fact that cash heating oil prices are very rarely better than credit card heating oil prices, the choice for most is obvious: credit cards are the way to go.

The following shows the pros and cons of paying with a credit card or paying cash for heating oil.

Pros and cons of paying cash for heating oil vs. paying with a credit card for heating oil.

The Verdict: Paying with Credit Cards Is Better

Beyond the convenience factor, the fact that you do not need to meet a driver face-to-face to exchange dollar bills cannot be overlooked. Who wants to do this, especially during a pandemic? Paying with a credit card is more convenient in so many ways. Dealers love it too; nobody likes handling thousands of dollars of cash – which could get lost or stolen – all day long only to have to deposit it in-person at the end of the day.

Knowing this, you can rest assured that you’re getting the best prices on heating oil – even if you’re paying with a credit card.

Happy heating,