From CNBC: 2024-05-26 09:00:01

Merchants are increasingly offering discounts to customers who pay with cash rather than credit cards, saving about 2% to 4% on purchases on average. The share of cash payments receiving discounts has risen to 3% in 2022 from 1.8% in 2015. Paying with cash can lead to savings, with some businesses charging extra for credit card purchases.

Businesses offer cash incentives to avoid fees from credit card transactions, which can cost about 2% to 4% per transaction. Cash users can save money through discounts on purchases, while merchants may also add surcharges to credit card transactions to offset those fees. Not all states permit surcharges, with some places limiting or outlawing the practice.

Consumers are often enticed by cash incentives, with research showing a 19.2% increase in the likelihood of paying with cash when a discount is offered. Gas stations, health care providers, and even major retailers are introducing cash discounts. Other big-ticket expenses like tax bills and college tuition may also benefit from cash payments due to processing fees.

While cash offers savings, credit cards provide protections such as fraud and return policies. Using a card may be beneficial for tracking spending or convenient for certain purchases. Debit cards are a middle ground, as merchants generally cannot add surcharges to these transactions. Consumers should weigh the advantages and drawbacks of each payment method to make an informed choice.

Read more: Here’s when paying with cash can be better than credit card