Using Credit Cards to Receive Cash Discount

If you're like most people you have several credit cards which you use regularly. If you are making small purchases they are fine, but what if you are making a higher dollar purchase and want to save as much as possible?

If you can afford it, you might want to use cash to save. Here's why. Merchants pay several fees every time they complete a credit card transaction. That's why many retail stores have their own credit cards. They earn money on the transaction and they also make money on interest charged to their credit card users. Merchants pay a discount rate, a transaction fee and monthly fees to the national credit card companies. Typically the discount fee is 2-5%. You can often save this fee.

Let's assume that you are purchasing $400 worth of clothes at a local store. You could use a Visa, MasterCard or other national credit card or you could pay cash. Here's what I do. I take out my card and say, "I could use this or I could pay cash." The clerk is is confused. I say, "If I use cash I'd like a 5% discount." The clerk then thinks I'm nuts. I ask the clerk if the manager is available and then I present my offer. I already have the clothes selected and I have the cash in my hand along with my credit card. I explain that I know it will cost him a fee if I use my card, but I'd rather save him from paying that and I'd like to receive it in the form of a discount for using cash for these purchases. Often they will say they don't pay that much so I say - "well whatever your charge is, I'd like the discount so I can make these purchases." One must be polite. I put on my "humble", but certainly telegraph that I probably won't buy unless I get a small discount. Often they say that they can give a lesser discount. I thank them and tell them I am appreciative.

Will it work? Not using a credit card works for me! Here are a few savings over the last several months from not using a credit card. Christmas presents at a local toy store saved me almost $9. A gift for my wife at the local jeweler saved me about $17. When my wife and I bought a new refrigerator we saved a little over $35. I've saved thousands over the years. Will it always work? Nope, I've had some decline my offer. I consider it their loss as I usually leave without making a purchase particularly for appliances, furniture, jewelry and other items where I might spend as much as a thousand dollars. Is it small bananas? I guess it all depends on how many bananas are in your wallet. My thinking is that I want to retain as much as possible.

Some credit cards like the Discover Card will pay you cash back, but be careful, the devil is in the details - read the fine print! Of course you have lost everything if you pay an annual fee and let charges accrue as they will earn more from you than you can possibly save by not using a credit card.

My children are were often uncomfortable with my desire to save as they grew up, but now that they are on their own, they embrace my thinking and in fact often call to announce they saved $10 or $15 in a recent purchase by not using a credit card.

I suspect you have to answer a few questions about yourself before you undertake this approach to save. If you can stand rejection which is bound to happen, then go for it! If not, pay the regular price and know that you have contributed to the profits of a major credit card company. If you are prepared to leave without a purchase, you are in a better position to negotiate. I occasionally say that I will not make the purchase without a 2% discount in an effort to cajole. If you believe this is being thrifty, you will want to pursue this approach. If you believe it is cheap, then by all means continue to shop in your usual manner.