WalMart has a new deal to get customers into their stores: gas discounts. The retailer will knock off 10 cents per gallon at Walmart and Murphy USA gas stations when customers pay with a Walmart MoneyCard, a Walmart credit card or a reloadable branded gift card. The deal is limited in scope: it will extend through the end of September, but is only available in 18 states, primarily in the South and Midwest.
The discount itself is almost unrestricted. It applies to any type of fuel or diesel, up to any amount, at any Murphy’s or Walmart gas station in participating states. So, why the great deal? What’s in it for Walmart?
More cards means more foot traffic
Walmart stumbled upon something great with the reloadable gift cards and the Walmart MoneyCard, a prepaid debit card. The cards drive customers into the stores, not just to purchase the card, but again and again as they reload it. The MoneyCard can be reloaded in a number of ways: by check, cash or debit card at a Walmart store; through a Green Dot MoneyPak; by direct deposit; or by a money transfer from a bank. There are two free ways to reload the card. The first is through a direct deposit. The second is by going into a Walmart store (unless your bank doesn’t charge you for an electronic money transfer). Every time you want to reload, then, you walk into a Walmart, and probably walk out with new purchases. The Walmart Gift Card, too, must be reloaded in-store, and of course is only redeemable at the retailer’s physical locations or website. To avoid fees, customers need to come into the megastore itself.
No-fee cash advances loosen shoppers’ purse strings
The megastore also offers two Walmart credit cards: the Walmart Discover and the Walmart Credit Card. The first can be used anywhere that accepts Discover (which isn’t as prolific as Visa or MasterCard), while the second can only be used at the retailer itself. Many merchants use this two-card system that allows users to choose between a universally accepted card and one that’s only useable in-store or online.
Where the Walmart credit cards distinguish themselves is in cash advances. Most credit cards charge a cash advance fee (the standard is 5%) and a higher interest rate that kicks in the day the advance is made rather than the usual 25 days or more. Walmart credit cardholders can take out a cash advance with no fee at a Walmart cash register, and the advance is treated like a purchase (no higher APR, and the same grace period). This is another way to not only get customers in the door, but to get them spending more than they otherwise would. For some cardholders, the lenient cash advance may be a lifeline when they’re trying to make ends meet, but for others, it can be a temptation to overdraw and mire themselves in debt.
Why the gas discount isn’t really about gas
Walmart wants customers to pump at their gas stations, of course. But the megastore sees more of a benefit by encouraging customers to use their branded cards, which increases foot traffic in the Walmart stores themselves.
But is the discount really worth it? It depends on your credit. The Walmart discount averages out to about 2.5-3%, depending on the price of gas. Some gas credit cards will give as much as 5% back, whether at a certain station (like the BP credit card) or at any station whatsoever (like the PenFed Platinum Rewards). However, the latter card requires excellent credit, and someone with bad credit might find getting a credit card at all to be difficult. In that case, especially if you’re one of the unbanked or underbanked who frequently uses prepaid debit cards or reloadable gift cards, the Walmart discount is a great way to save money without needing a credit card.