Paying with Cash: A Smart Financial Move You Might Be Overlooking
A growing trend among businesses is allowing people to earn up to 4% by paying in cash. This may come as a surprise to many, but paying with cash can save you money and even earn you a little extra cash in the process. You can even help support your local businesses in the process! In this blog post, we'll explore how businesses are passing on credit card processing fees to customers, and how paying with cash can be a smart financial move.
Credit Card Processing Fees:
Credit card processing fees are charged to businesses by credit card companies every time a customer makes a purchase using a credit card. These fees can range from 1% to 4% of the total purchase price, depending on the card and the business. In the past, businesses would typically absorb these fees as a cost of doing business, but now some are passing them on to customers.
Paying with Cash:
When you pay with cash, you can avoid credit card processing fees and potentially earn a little extra cash. For example, if you spend $50 on dinner at a restaurant and are charged a 3% processing fee when you pay with a credit card, your total bill would come out to $51.50. However, if you pay with cash, you can save the 3% processing fee and only pay the original $50, earning you a 3% return on your money.
Furthermore, some businesses offer cash discounts as a way to incentivize customers to pay with cash. These discounts are typically equal to or slightly less than the credit card processing fee, so you can still save money while the business avoids the fee. This is a win-win situation for both the business and the customer.
The Benefits of Paying with Cash:
Paying with cash can offer several benefits, including:
1. Saving Money Over Time: Over time, paying with cash can add up to significant savings. If you spend $25,000 a year at various establishments and are able to pay with cash instead of using a credit card, you could save up to $1,000 a year.
2. Avoiding Credit Card Debt: Paying with cash can also help you avoid credit card debt. It's easy to overspend when using a credit card, but when you pay with cash, you can only spend what you have.
3. Supporting Local Businesses: When you pay with cash, you're supporting local businesses by helping them avoid credit card processing fees. This can be especially important for small businesses that may be struggling to make ends meet.
Considerations When Paying with Cash:
While paying with cash can offer several benefits, there are some considerations to keep in mind. For instance:
1. No Rewards Points or Cash Back: While paying with cash can save you money, it may not earn rewards points or cash back like a credit card would. If earning rewards is important to you, consider using a credit card for certain purchases and paying the balance in full each month to avoid interest charges.
2. Risk of Carrying Cash: Carrying cash can be risky if you're not careful. Make sure to keep your cash in a safe place and only carry what you need to avoid loss or theft.
Conclusion:
In conclusion, paying with cash can be a smart financial move that can help you save money and even earn a return. By avoiding credit card processing fees and taking advantage of cash discounts, you can enjoy significant savings over time. While there are some considerations to keep in mind, such as the lack of rewards points or the risk of carrying cash, paying with cash can still be a great way to achieve your financial goals and support local businesses. So the next time you're making a purchase, consider using cash and start enjoying the savings.