Can You Get a Cash Discount for That?

by Miranda Marquit · 11 comments

We keep hearing that, since the recession, cash is king. But is it really? It’s true that if you pay with cash, rather than using a credit card or financing you get an automatic “discount”, since you aren’t paying interest charges. However, you can accomplish the same thing if you pay with a credit card and then make sure that you pay off the balance before you are charged interest. Some small retailers, though, might be willing to offer you a small discount if you pay with cash, rather than swiping a card. Here are a few other tidbits on paying cash you may not know about.

Interchange Fees

Payment processing networks (like MasterCard, Visa, Discover, etc.) charge merchants each time you swipe a card. This includes debit cards. Some small, local retailers and restaurants — even though credit card companies strongly discourage it in their terms of service — are willing to give cash customers a bit of a discount since it saves on interchange fees. Many retailers that accept credit cards inflate prices to cover their interchange costs, so it makes sense for some of them to give a discount in order to reward customers that cost them less.

It doesn’t hurt to ask for a cash discount, or ask if one is available at your favorite store. The worst that can happen is that you are told that no cash discount is available.

Where You Are Most Likely to Get a Cash Discount

There are some places where you are most likely to get a small cash discount. This includes some local gas stations, small independently owned retail stores, and service providers (carpet laying, plumbers, etc.). However, you are most likely to see the best cash discounts if you pay for medical services with cash.

Many doctors, dentists and specialists will provide you with a cash discount if you pay on the day of. I have a dentist that offers a 5% discount if you pay with a debit card, and 10% if you pay with cash or check. (The smaller discount for the debit card accounts for the interchange fee the dentist has to pay for the debit card transaction.) In order to avoid insurance billing and the hassles that come with it, you can likely get a cash discount for medical services too. If you have a high deductible health insurance plan and a Health Savings Account, you can save up for things like dental visits and other eligible expenses, paying immediately and getting your discount.

Will You Get a Cash Discount at a Car Dealership?

Car dealers may say that you are getting a great deal because you are paying cash, but one of my friends who sells cars assures me that this is mostly not true. The reason is that a cash discount doesn’t benefit a dealer at all. A car dealer gets the money up front, whether the bank you borrow from provides it or whether it comes from you. The difference is that if you get your financing through the dealer, the bank that actually issues the loan usually gives the dealer a kickback. You are more likely to get a “discount” (by the time you pay interest on the loan it won’t be much of one) from the dealer if you agree to let the dealer arrange financing.

In the end, there is some value in asking for a cash discount. You can save a few bucks, and that starts to add up. Besides, you’ll never know about the discount if you don’t ask.

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{ 11 comments… read them below or add one }

Money Beagle January 11, 2011 at 5:07 am

We have a guy that does tree trimming for our backyard, and he will knock off between 25-35% if you pay in cash. Any work you need done around the house, you should attempt to pay in cash as I think this is a great opportunity to save some money.

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mario February 25, 2013 at 8:14 am

25-35%? Sounds like he’s saving more than the interchange fee if he’s willing to offer that sort of discount…

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Marnie January 11, 2011 at 6:49 am

Many service providers will gladly accept a cash payment (otherwise known as paying under the table) so that they don’t have to claim the interaction and pay taxes. I know you aren’t talking about this in your post, but while I don’t promote tax evasion, it’s food for thought…

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retirebyforty January 11, 2011 at 10:07 am

I got a 3% cash discount from the blinds guys (for the windows.) I asked and they passed the credit card saving on to me.
The 25% off guy is definitely doing tax evasion.

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vered January 11, 2011 at 11:15 am

Persoanlly, I find that the convenience of paying with credit is mostly worth it… Of course, I always pay statements on time and in full.

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KM January 11, 2011 at 3:38 pm

I agree, except I use debit. Paying with cash means I always need to carry it and not always knowing how much I will need is bound to result in either carrying huge amounts with me (which is not safe) or having to use the card anyway. There is also the thing with the change in coins, time it takes to count the money and the change, etc. And if you get robbed, you lose less if you carry little or no cash.

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You be the bank January 12, 2011 at 2:18 pm

That is hard to believe that you can’t get a cash discount at a car dealership. i’ll have to look into that.. good article

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CreditShout January 15, 2011 at 8:17 pm

Small businesses are definitely more likely to give you discounts for when you pay in cash. I always keep this in mind when I go shopping. Great tips.

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Ralph January 17, 2011 at 12:06 pm

Nice post exploring cash discounts. I think a lot of people will find your section on car dealers quite interesting.

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mario February 25, 2013 at 8:16 am

Perhaps one way to get your own cash discount is to ensure that there’s no penalty for early pre-payment, take the discount that they offer with financing, then immediately pay off the loan with a better one.

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Arminius Aurelius July 31, 2014 at 9:41 am

I have a 2 nd cousin who was raised by parents who also taught him thrift . His parents were financially well off when they retired . But this fool married a woman who was used to getting anything she wanted . He went along with her and spent , spent and spent and went into debt . He is now over 50 years old , they lost their home due to foreclosure and have debts . His wife can no longer work due to health reasons and if he remains healthy he has another 12 to 15 years in order to clear up his debts and then ……………….POVERTY . The sad thing is that he taught his 2 boys [ 22 years and 29 years old ] the same profligate way of life . Both are losers .
A Fool and His Money are Soon Parted

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