Wide Open Wallet
An honest look at family finances
My Gallons
Author: Ashley10 Jul
Last night my husband was watching the news and they did a piece on MyGallons.com. I had never heard of it but I had a look around their website. I have mixed feelings (more bad than good) about this service.
Here’s the scoop: With their service you basically prepay for your gas. On their website you can buy a certain number of gallons and they give you a “debit card” to use at the pump. The price you pay for the gas is set by them, but they say it is an average price for your area with estimated taxes. Let’s just go ahead and assume they set a fair price for the gas. So for example, right now let’s say you buy 20 gallons at $4 each for a grand total of $80. You put it aside and in 6 months (or however long) gas has gone up to $4.75. You pull out your prepaid gas card and pump 10 gallons worth of gas. You just saved $7.50 and still have 10 gallons left to pump. There is a fee for the service, of course. There is an annual fee of either $30 or $40 depending on your service level. Then they also charge a $1.95 fee to reload the card.
Sounds ok right? I know recently on the news I’ve heard about people blowing up their houses because they’ve been stockpiling gas. So apparently there is a market for this.
My first concern is the fact that this is such a new service who knows if they will still be around when you go to actually redeem your prepaid gas. That alone is reason enough to wait and see. Add that to the fact that the bank they originally had a contract with has already backed out and all my warm fuzzies are headed for the hills.
But even besides the fact that this company has no bank backing (which they need in order for you to redeem your gallons, the bank pays the gas station when you redeem your gallons) is the question “How is My Gallons making money?” They certainly won’t be around long if they can’t make money. A customer isn’t going to pay for this service if they aren’t going to save money overall. So profit isn’t really coming from the customer. Ads maybe? They would make a ton of money if gas goes down in price. If you pay $4 today for gas and in 6 months gas is only $3.50 then they are raking it in. So is that what they are banking on? If so then I don’t feel great about prepaying my gas today.
So overall I’m giving MyGallons.com a thumbs down. I’m just not feeling it. To many “what ifs”.
pic by: bitzceit
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5 Responses for "My Gallons"
How about this? How do you know it will be accepted in your state even? It might only be available in specific states and even then only specific gas stations will take the money.
Thus by that logic if stations try it out for 1 month, don’t like it and drop out by the time you finish using the card in 6 months maybe no stations take it anymore???
Eek. Huge risk, bad idea.
Good review and summary. I have never heard of this web-site either… it’s an interesting idea. But I agree with you… this doesn’t sound like it’s going to work. And hopefully in the near future we’ll figure out how to get away from gas all together - that would mess up their business plan pretty good.
Well, part of the money they will make is from interest. People pay them for gas but won’t redeem it right away. They’ll hold onto their cards until they think the price per gallon is high enough to warrant using it. The whole time, MyGallons is probably investing that money is stocks, bonds, whatever, who knows what.
The other piece is they may be banking on people never redeeming their “gallons” and forgetting about it. Happens all the time with gift cards at stores/restaurants.
Plus the fee they charge.
So, it seems there is money to be made - but whether it’s enough for the company to stay afloat is the question.
Great post!
To chacha: Great points! Investing the money people give them today while they wait til it is redeemed. I hadn’t thought of that.
[...] Review of MyGallons.com by Wide Open Wallet. Reminds me of the adage of “Heads I win, tails you lose” for prepaying gasoline. The company wins if gas prices go down, but you might lose if gas prices go up and they don’t have money to pay. [...]
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