Why do gas stations charge 9/10ths of a cent, and how do they even take that out of your bank account?
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The use of the decimal is to make it appear that the price is one cent lower. This used to matter when across-the-street price wars were a thing.
The decimal is used in calculating the total price and is rounded on the last cent. You pay the final price that shows on the pump, and that price is to the whole cent.
like any other business, transaction totals are rounded to the nearest cent when payment is settled.
this eliminates the need for handling fractions of a cent with cash or electronic transfers, while not presenting a terrible inconvenience to the customer.
Nobody mentioned that that 9/10 started out as a tax and it was never repealed so it stayed.
It’s the same reasoning as prices set at $x.99. We tend to subconsciously perceive the price as being a bit lower.
After 10 gallons, that extra 9/10 of a cent becomes 9 cents. The total price is rounded to the nearest penny.
You don’t get charged that 9/10th of a cent, it gets rounded.
If gas is $3.999 per gallon, and you get 1 gallon, it just rounds to $4.00
Once you get to 6 gallons, it’s 23.994 so it gets rounded to 23.99.
This has 2 main reasons. Back with the first gas stations were made, a single dollar had much more buying power (this has decreased due to inflation) so changing gas prices by a whole cent would greatly change the cost of a whole tank. To combat this, gas stations would tweak the price by fractions of a cent.
At buying 10 gallons at 10 cents a gallon is just a dollar, but 11 cents a gallon makes it $1.10. Changing the price to 10.1 cents a gallon, 10 gallons now costs $1.01.
It sticks around because of the psychological effect that $3.999 looks like much less than $4.00
Answer: There actually is an official unit of US currency worth 1/10 of a cent. It’s called a mill, and its symbol is ₥, like ¢ and $. But there are no coins or bills worth this amount. Gas stations use it because it makes it look like you’re paying less (and technically you are), even though it almost inevitably gets rounded up at the end of the transaction.
I literally never think I’m getting something cheaper or the price or lower when I see something costs $x.99.
I always round up automatically without thinking. I know that $4.99 is going to be over 5 dollars at the end of the transaction. Who thinks like this?
>The first federal gas tax was enacted as part of the Revenue Tax Act of 1932, establishing a federal excise tax on gasoline of 1/10th of a cent.
https://www.convenience.org/Topics/Fuels/Why-Gas-Is-Priced-Using-Fractions-of-a-Penny
Fractional prices first appeared in the early 1900s as states and the federal government implemented gas taxes to help build and maintain highways.
Back in the 1930s, when gas was just 10 cents a gallon, adding a penny would seem like a huge increase by 10%, so they went with less than a cent.
Source: CBS News
Over here we have some with .7 at the end of their prices to make them cheaper when sorted by price.
It rounds when the payment processes since you are buying fractions of the volume anyway, and it seems that most people are still choosing amounts to buy rather than just filling up because of the way discounts work so it gets charged the exact amount that they buy less the discount, no fractional cents there.
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