When the first "free" oil company credit card was offered here, reaction was almost entirely favorable.

"Wonderful," most of my friends said. "I won't have to carry so much cash. I'll have a record of my expenses for my own budget, for my employer, and for income tax purposes. And instead of laying out cash, I'll have a month of free credit. Great!"

A few killjoys and curmudgeons - and I am proud to say that I was among them - sniffed disdainfully. "There's no such thing as a free lunch," we reminded anybody who would listen. "There's no such thing as 'free' credit. One who uses credit must expect to pay for it - if not in visible form then in the form of higher prices."

The rationale for "free" credits cards was that they would increase sales for the issuing company. Increased sales volume would offset the cost of extending credit.

However it was clear from the outset that credit cards, like trading stamps and similar gimmicks, offer only a temporary advantage. As soon as one company began to drain business from its competitors, every company would begin to offer its own "free" gimmick in self-defense. In the end, there would be no competitive advantage to anybody, yet everybody would remain additional cost of the gimmick.

For me, the reduction ad saddled with the absurdum came in the year a huge grocery chain made less profit out of selling $600 million worth of food than its trading stamp company collected for the stamps it supplied.

The hard truth is that we pay handsomely for every bit of the "free" credit we accept from any merchandiser. It can't be any other way. He has to cover his credit costs in higher prices or go bankrupt.

Today every major oil company issues "free" credits cards, and every major oil company is going through an agonizing reappraisal of this practice. Interest expense is heavy. Bad-pay and outright fraud have cost them millions. And there is a built-in, inescapable expense in keeping records and sending out bills that didn't exist when everybody paid cash for gasoline.

So it has come to pass that every big oil company is wondering whether it is time to start charging more for gasoline sold on credit, or, to put it another way, to start charging less for gasoline sold for cash. Three of the biggest have already embarked on test programs to find out whether the public knows that it pays for the convenience offered by credit cards, and whether the public cares enough to switch to cash.

The newsletter "Of Consuming Interest," which is published by Federal State Reports of Arlington, says this in its current issue:

"When a merchant allows payment for goods with a credit card, he has to pay a discount fee to the credit card company. A provision in the 2-year-old Fair Credit Billing Act is based on the premise that the same discount can be passed on to consumers who pay with cash rather than card. Some oil companies are now offering gasoline price discounts to cash customers in certain pilot areas to determine customer payment preference."

Currently, says the newsletter, Exxon, Mobil and Amoco are conducting test programs in isolated parts of the country. Details vary, but the average discount being offered is about 5 per cent or 2 cents per gallon. In Charleston, S.C., for example, self-serve customers are paying 52.9 cents per gallon for their gasoline. Compare that to what you now pay here.

The other oil companies are watching these experiments the way a long-tailed cat watches a rocking chair. The industry's future course will be determined by consumer reaction.

If it turns out that consumers in the test areas don't know, or don't care, how much they pay for "free" credit, the test programs will be quietly abandoned. But if buyers prefer cash payments and lower prices, things may change. We'll have to wait and see what happens.