Does Paying in Cash Help You Save Money?
Does Paying in Cash Help You Save Money?
Sam DiSalvo Wed, May 10, 2023
In a primarily cashless society, you probably rarely have cash on you. Now even cash-run events of the past like flea markets and Girl Scout cookie sales have Square readers to take credit cards. Paying with cards is certainly convenient, but is it costing us more?
“Ten years ago, I would have said absolutely. Today, as more spending becomes digital, there are fewer and fewer ways to save money with cash. Having said that, there still is a place and time for cash,” said Derek Sall, founder of Life and My Finances. Here are the pros and cons of paying with cash, and the areas where you can still save when you do.
Pro: You Can Sometimes Get a Discount for Paying in Cash
In some business models, workers will cut you a deal if you pay them in cash. “Need a photographer? A carpet installer? Need a new roof? There’s often a steep discount — like 10%-25% — if you offer to pay them in cash,” Sall said. Many businesses do this to avoid the fees they have to pay on processing credit card transactions. This fee can be anywhere from 1.95% to 2.5% of every transaction, so business owners prefer to avoid that if possible. If you carry cash, you’ll save a lot when you encounter these types of situations, and the vendor will appreciate it, too.
Pro: Psychologically, Using Cash Might Help You Save
There might not be an exact dollar amount you’re guaranteed to save, but studies have shown that paying with credit cards is considered a less “painful” transaction, according to Megan Kelly, financial advisor and communications director at GoodCheddar.
“According to some experts, the psychology behind paying with options other than cash is connected to the idea that dematerialized money can be linked to reward and regret emotions which influences spending behavior. As such, the sensory stimuli associated with paying with cash are diminished when using apps, credit cards and other payment alternatives,” Kelly said. This means that paying with cash often means more to people because they can feel it disappear, whereas that’s not felt as profoundly when you swipe with a card.
Pro: No Interest Charges or Annual Fees
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https://finance.yahoo.com/news/does-paying-cash-help-save-130043495.html