This store has just upped the ante a little bit. The gas program is still going on, but they have also added a gift card program. Here’s how it works:
If you buy a $250 gift card they will add $20 to the balance, giving you a $270 gift card for $250.
If you buy a $300 gift card, they will add $30.

We asked how this integrates with the gas program, and they said that no gas points are given when the gift card is purchased, but points are given like normal when the money on the card is actually spent.

Our grocery budget is about $600 a month for a family of five, including non-grocery things bought at the grocery store (toiletries, etc.). My wife also gets her prescriptions there, since they are the same price as everywhere else, but we get the points.

So, this is all upside to us. Our plan is to buy two $300 gift cards every month, and use them for that month’s groceries. Since we spend that much every month anyway, this has basically no cost to us, but gets us an extra $60 to use for groceries.

One question that arises is what to do when the promotion ends. It is one thing to prepay your monthly grocery bill to get the rebate, since you would spend that much that month anyway. But what about when the program is about to expire — how many months worth of groceries do you prepay? It is not worth paying credit card interest just to save on groceries, but we also want to maximize the rebate we get. We haven’t decided what we will do yet, and there may also be limits on how much you can do at one time, but I think it would be worth prepaying at least a few months to get the 10% rebate.

What about you? Anyone else have a grocery store with this type of program? Are you planning to take advantage of it?

If you already shop at this store, it’s obvious that this is a great deal — you get something for doing what you are already doing. But if you don’t shop there, should you? As always, it depends on the circumstances.

I live in a town that has four main grocery stores, although I am sure there are others as well. We don’t typically shop at the grocery store that has this promotion, so when the program started, we discussed whether to switch. Because my wife and I are both quantitatively inclined, we tend to remember how much things cost at our “regular” grocery store, so we decided to go to the new one and compare.

Of the four chains in our area, this one is probably the second cheapest, but we shop at the one that is the cheapest, so switching would cost us money. But would we make more on the gas savings than we spent on groceries?

After a couple week test, I think we can safely answer yes, but with some additional commentary. We have changed from shopping at one store, to shopping at two. Simply put, $.01 per gallon for every $10 spent is not enough to cover the higher costs at the new store. So, we go to the new store and get the “specials” that get us extra points, and things that are cheaper here than at our regular store, and then buy everything else at our old store. This takes a little bit more effort, but it seems to be saving us quite a bit on gas. Last week my wife put 19 gallons in the car for $1.97!

One other thing we discovered is that the new store has a pharmacy and prescription purchases qualify for the program. We checked around, and for my wife’s prescription, everyone charges the same amount, so buying it at the new store saves us $.11 per gallon on gas, while not costing any more.

The last thing we discovered is how difficult it is to wait until your tank is almost empty to fill up. Since the discount is good on up to 20 gallons, and any unused amount does not roll over, you are wasting money if you fill up before you are almost empty (neither of our cars holds more than 20 gallons). But it is hard to drive around with a quarter of a tank and not get nervous about it, so that takes some getting used to.

This program has dramatically decreased our gas budget, from $250 per month last winter to $50-$75 per month now. Some of that is due to gas prices, but some is due to this program as well. I think this post should give you some ideas of how to analytically think about a program like this to see if it’s worth it.