cash discountI rarely have more than $20 in my wallet.  I use credit cards all the time to earn reward points, but I may have to rethink my decisions as cash is king.  Businesses are tired of paying the fees associated with credit cards, and they’re offering discounts if you pay cash.

Cash gas discount

Cleveland’s west side, a gas station is offering gas almost 20-cents cheaper than stations down the street if you pay cash. It’s a trend that’s playing out all across the United States.

While in Connecticut recently, I noticed the stores were not just promoting their unleaded, premium, and diesel prices. They were also advertising a cash and credit price.

Gas stations in Connecticut began offering the cash discount when gas prices spiked in 2007 and 2008.  I’ve visited since then, and never noticed until recently. I guess it took gas to reach $3 a gallon before I noticed the discounts in CT.  Most of the gas stations I saw had price differences of about 5-cents for cash and credit.

Offering cash discounts is typically a gray area because of franchise agreements. The state of CT passed a law to make it easier for gas station owners to offer the discount.  The law was passed to help gas station owners who had difficulty offering cash discounts because of their franchise agreement. The discount is legal as long as the credit price is not inflated. The state law specifies that the cash discount must be taken off the credit price or normal price that would be charged.

Credit card companies respond to cash discounts

There is a lot of debate about this, and a lot of talk that cash discounts are not allowed because of credit card agreements. MasterCard says its rules don’t prohibit a merchant from offering a discount and calls the restriction a myth. In a fact and myth article on MasterCard’s website, the credit card company wrote “Fact: MasterCard has always allowed merchants to offer discounts for cash and check. Gas stations, for example, used to regularly offer cash discounts, but the majority independently ceased this practice.  These types of businesses came to recognize that payment cards, such as MasterCard, offered them significant benefits over cash or check transactions.”

Visa also writes on its site that cash discounts are allowed writing, “Retailers can encourage their customers to use other forms of payment, such as cash and checks, and can discount for PIN debit and cash and checks provided that the offer is made to all respective buyers.”

With the two big credit card companies saying it’s okay, it will be interesting to see if merchants start acting and doing something to gain a competitive advantage in this tough economy.

medical cash discountMedical cash discount

You should look beyond just gas stations to save money.  Cash discounts are also becoming big in the healthcare industry.  Before your next procedure, you should shop around for the best deal. It could save you hundreds of dollars.

Call independent labs and imaging centers, because they may offer a cash discount. They’re most common at imaging centers. A hospital may charge $2000+ for a CT scan, but you can get it for $200 at an independent facility.  The independents say they can charge significantly less if you pay cash because they don’t have to process your claim with an insurance company and wait months to get paid. They get paid on the spot.

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If you take advantage of the healthcare cash discount, it typically won’t count toward your deductible. However, if you have a high deductible plan and you’re likely not going to meet the deductible it may be worth it to pay a few hundred dollars cash.  You can always reimburse yourself afterward from your health savings account.

Cash discounts are out there. You just have to ask or encourage your favorite merchant to offer a discount.