Did you know what is fuel surcharge when you swipe a credit card to a fuel station? These are the charges which are used anywhere online or offline.
This charge is usually around 2%-3% of your billing cost which is absorbed by the merchant.
Fuel Surcharge is a Card Transaction Charge
The fuel business operates at a very low margin, & these transaction charges can’t be absorbed by business operators. So, now the transaction charges have been passed on to the customer & the fuel station will get 100% of what the customer pay.
Now the transaction charges paid by you on the actual amount is the fuel surcharge which is nearby 2.5% along with little service tax levied.
Now look what does this mean;
If you fill fuel of Rs.1000, this is the cost you need to pay through your credit card.
Rs.1000+ Fuel surcharge + Service Tax
= Rs.1,000+ Rs.25 + Rs.3.68 = Rs.1028.68
Fuel Surcharge Waiver on Credit Cards
You have seen many cards that have a fuel surcharge waiver feature. They waive fuel surcharge but what they do not waive is service tax levied on surcharge.
This means, on spending Rs.10,000 on energy every month, you have to spend an extra Rs.3000(Surcharge) + Rs.434(S.Tax) = Rs.3434 per year
Here the surcharge is waived on using credit card but the service tax charged is not waived off.
Although this is not a huge amount, you can save this amount by paying cash for the fuel. You should try to reduce the use of credit cards for fuel purposes, otherwise, it will drain you charging useless amounts.
Fuel Surcharge has Higher Cap on Premium & Super Premium Cards.
Most of the cards have a fuel surcharge on the transaction limit. Usually, that too revolve around Rs.400-Rs.5000 per month. In this, some cards have an upper cap of a maximum of Rs.250 per month.
If you want to know the best fuel cards in India then check our article on the best fuel credit cards in India.