Cash discounts, while still rare, are up over 60% from 2015. Here's how much you can save

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More businesses are offering financial incentives to consumers who pay with cash rather than credit card. Consumers may save 2% to 4% on their purchase by using cash. They’ll also often save with a debit card, experts said. Businesses charge more for credit card purchases due to fees they incur per transaction. Ryanjlane | E+ | Getty Images

Sometimes, it pays to pay with cash.  

More merchants are offering a lower price to customers who use cash rather than credit card for a purchase. That means opting for paper over plastic may save you money in some cases.

Just how much?

Typically, cash discounts run about 2% to 4% on purchases, though savings can be higher, experts said.

The share of cash payments with a discount is still low — in fact, only about 3% of all cash payments in 2022, according to data from the Federal Reserve Bank of Atlanta.

However, that share is up more than 60% from 2015, when 1.8% of all cash transactions had a discount, Atlanta Fed data shows. While not yet the norm, cash incentives are likely to become more widespread, experts said.

Meanwhile, other businesses add a surcharge when customers use credit cards for purchases. In such cases, paying with cash would also yield savings.

Nearly 7 in 10 cardholders said a business has charged them extra for paying with a credit card, according to a recent LendingTree survey.

The trend comes as consumers have steadily shifted away from using cash for purchases: Consumers made 18% of payments with cash in 2022, down from 31% in 2016, according to the Federal Reserve. Meanwhile, credit cards’ share grew to 31% from 18% during that period.

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“Sometimes, it can make sense to just go ahead and pay cash,” said Matt Schulz, chief credit analyst at LendingTree.

That may be the case even after accounting for credit card rewards, Schulz said. The largest general cash-back return on most credit cards is 2%, for example — a percentage often exceeded by cash discounts, he said.

“If the merchant establishes a discount that’s high

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