occupy wall street mask(Guest post by a friend of mine who wishes to be anonymous ;))

He spread the 20 dollar bills in piles of hundreds on the table in front of me. 8 total rows of $100 each. For a moment, I felt like I was in a James Bond movie .. or something less savory, like a strip club. :-/

The CCTV monitor behind him was clearly recording the scene. It felt scandalous, but at the same time I felt like I was beating the system just like the big banks do.

I had just knocked off over 30% of what the auto shop would have charged me had I paid with a credit card! A $1,200 bill cut down to $800 – just because of a payment method. I don’t even know if they would have accepted my AMEX anyways, which apparently charges vendors double the fees that VISA or MasterCard does.

It felt so seedy watching so many 20 dollar bills spread across the table like that. After the 5th pile, it started to feel like monopoly money. But, I was quickly relieved as the vendor wrote up a receipt and provided warranty information for his work.

Just 1 night prior, I spent 10 minutes in another part of town making multiple ATM transactions. It was premeditated. I would reach my ATM limit for the day and need to make more transactions the next morning. That next day I was riding the bus with so much cash in my pocket that I decided I wouldn’t challenge the random bus rider who was cursing at the women with a child sitting within ear shot. I had a lot to lose at that moment!

This was not the first time I paid “all cash” for a service…

We all know that credit card companies charge a fixed fee plus a certain percentage of the transaction to shop owners. There is a sweet spot where a credit card transaction makes good business sense. I believe it is somewhere in the $10 – $100 range, which is why a lot of merchants may have a hand written sign at checkout noting a “$10 minimum credit card purchase.” But those credit card companies charge a percentage of the total purchase amount, and when the amount gets really high, you, the consumer, start to feel the pain. That is, if you knew you were paying for it!

I believe that credit card processing contracts prohibits vendors from explicitly offering different price points for cash customers vs. those paying via credit card. But, I have found that most vendors suddenly become very flexible with pricing when asked about a cash-only price anyway :)

So, do yourself a favor. Before reaching for that credit card during your next major purchase (that you already pay off every month, of course), think about asking the vendor what their price would be for a cash-only purchase. You may discover a special discount that gets you hitting up the ATM like a mad man too!

What have you saved money on paying cash only?

UPDATE: This convo sparked a new post on getting paid to report tax evasion ;) Click on over if you’re interested!

Guest Post by my anonymous friend who tells me I need to try this the next time we repair something. And you better believe I will now especially after reading this!

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  1. Call Me What You Want Even Cheap January 10, 2013 at 6:22 AM

    Cash definitely has more power than credit.

  2. Ashley January 10, 2013 at 7:13 AM

    I didn’t “save money” (beyond the interest on a loan) but I paid 10,000 cash for my car. It was a crazy amount of money to have in my pocket!

  3. Lance @ Money Life and More January 10, 2013 at 7:15 AM

    I have done this before and will continue to at least ask. Sometimes the vendor doesn’t discount the full price of the fee and other times the vendor is shady and accepts cash so they don’t report it on their taxes. I bought an air conditioner that was thousands of dollars and the vendor offered me $80 off. I didn’t accept it because if I put the air conditioner on my new Chase Sapphire Preferred card I’d get a $400 sign up bonus…

  4. Moneysavingmomma January 10, 2013 at 8:31 AM

    Gas stations will sometimes offer cheaper prices per gallon if you pay by cash, but their signs are sometimes deceiving, so you have to be careful when reading and stopping in.

    My husband and I saved quite a bit of money when we got married. When he purchased the engagement ring, he was offered $1000 off if he paid in check AND the owner also did not charge him tax (he had to agree to have the ring receipt shipped to him as if it were a transaction over the internet). We also were able to negotiate lower prices for our wedding bands using the same check/cash method and shipping the receipt to our home out of state.

    It never hurts to ask, small businesses are typically open to doing this, so ask away!

  5. Terah@The Credit Report Chick January 10, 2013 at 9:01 AM

    In the south where I live, there are gas stations that offer a discount per gallon if you pay in cash. Its not much….about 5-10 cents per gallon, but with the raising price of gas, its worth it!

  6. Mercedes January 10, 2013 at 9:12 AM

    I’ve found that the only time this really works is when labor is involved. You can’t go into Target to buy a $500 TV and hope they’ll knock it down to $400 if you pay cash. But as far as car repairs or home repairs or lawn service or anything along those lines, typically you can get somewhat of a discount by paying with cash.

    My brother has his own home improvement business, and I know that he charges those paying with a credit card more than he would someone writing him a personal check or forking over a few crisp hundred dollar bills.

  7. Anne @ Unique Gifter January 10, 2013 at 10:18 AM

    I’m happy to pay cash when it’s not a “taxes off” discount. Tax evasion is tax evasion and it doesn’t matter which income bracket you’re in!

  8. JoeTaxpayer January 10, 2013 at 10:37 AM

    When I see small businesses offer that kind of discount for cash, over 10%, to mean it shouts, “income tax evasion.” Even a small business won’t be paying more than 4% to process a credit card. A $400 discount to avoid $50 worth of fees?
    Not that you broke any law, but I’m near certain the guy you gave the cash to wasn’t reporting it. $100 in federal tax he didn’t pay. That’s 30micropennies that I will need to pay, along with my wife and daughter. 90 micropennies for the JMoney family too.

  9. J. Money January 10, 2013 at 10:54 AM

    These are great comments so far everyone, thanks! I’m gonna pass this along to my friend in case he wants to chime in too :) Here are my responses so far though:

    @Call Me What You Want Even Cheap – More power? Hmm…. I think it has a lot of power for sure, but I may have to debate you there and say that credit cards could give it a run for its money ;) All that convenience and security – and access to thousands of dollars on one tiny piece of plastic! – does wonders for those who use it appropriately. Esp when emergencies are involved. But I’ll agree that cash has it’s share of awesome perks too, I won’t deny that.

    @Ashley – Nice! I bet!

    @Lance @ Money Life and More – Haha… there you go! Another tip for us to consider too: make sure to compare it with the credit rewards you could possibly get back! :)

    @Moneysavingmomma – Wow, VERY nice! Must have been a killer ring too if the discount in itself was $1,000! Haha… Way to go guys :) (And I agree – those gas station signs always trip me up! The worst is when you go to pay and realize at the last minute it’s cash-only and now you’re screwed cuz you didn’t realize THAT was why it was so cheap, ugh… I swear they do it that way on purpose)

    @Terah@The Credit Report Chick – For sure, as long as you’re good about carrying lots of cash on you and/or don’t pay ATM fees in case you forget :)

    @Mercedes – Huh… You might be right on that. I don’t recall anyone getting items super cheap either at big box stores if they pay cash, good notice!

    @Anne @ Unique Gifter – Yes, important to keep in mind!

    @JoeTaxpayer – You think? It never occured to me that they were trying to skip out on the taxes part of it actually, but you may have a good point there… maybe that’s why they offered such a chunk off? Instead of like, say, 5% or 10%? Hmm…

  10. Brian January 10, 2013 at 11:42 AM

    I actually had the same situation a few years back! I had to replace the transmission of my Jetta and it was going to cost me $4100!! But, like you, I worked out the all cash option for only $3000. I feel that this option almost always works with mechanics, plumbers, etc. Basically, any small business owner is more than willing to negotiate if it saves you money but can increase their margin JUST enough. Great post!

  11. Pete January 10, 2013 at 11:56 AM

    I got a used truck for $2K after I said I would pay cash. Saved me $500!

  12. Grayson @ Debt Roundup January 10, 2013 at 12:01 PM

    People love cash. It is instant and it is tangible. I don’t mind paying cash for a service, especially if they will reduce my price.

  13. Joe @ Retire By 40 January 10, 2013 at 12:20 PM

    30% off? They are cheating on tax. I usually ask to pay cash too, but I have only saved a few percents.

  14. John S @ Frugal Rules January 10, 2013 at 12:21 PM

    I’ll echo Grayson, people love cash. I tend to use the credit card to earn the rewards points. But, if I am able to get a decent discount to pay by cash you better believe I’ll be plunking down cash vs. plastic.

  15. Pauline January 10, 2013 at 12:26 PM

    I have always paid cash for cars, motorcycle, anything but mortgage, or a 0% installments deal. I often ask how much the CC company charges the shop and offer an intermediate cash discount.

  16. Kira January 10, 2013 at 1:24 PM

    We bought our last car with $10,000 cash. My husband also negotiated a cash price on my engagement ring.

    Staying away from the tax discussion – I really like the idea of cutting out the banks. Our merchants (grocery stores, gas stations) essentially pay those fees to them for our convenience. I think we would all think a little differently about our “points” if we knew how much lower the “cash” price would have been.

  17. Samantha January 10, 2013 at 2:10 PM

    I’m surprised no one has mentioned a certified check. My bank will issue me one for free (although some may charge a very small fee) and it saves me the worry about running into ATM limits, or carrying around thousands of dollars in my pocket when going about the city (especially if I were taking the bus! geez!)

  18. Edward Antrobus January 10, 2013 at 2:25 PM

    I’ve never had any luck with this myself. But then again most of my trips to the garage have been places that don’t accept credit card payments in the first place.

  19. K January 10, 2013 at 2:42 PM

    I think this would work with only small businesses. As for those who are saying that they are cheating on taxes for giving a steep discount… I say MYOB :) . The business offered you the discount and you paid in full for the service. What they do with their taxes, is up to them

  20. Mrs. Pop @ Planting Our Pennies January 10, 2013 at 6:46 PM

    I’m with the folks that would be worried that this was an under-the-table transaction when it comes to Uncle Sam.

    But there are times when I’ve paid with check to small local service providers because I know their cc fees are high and depositing a check is easy enough!

  21. Max @ MyWallStreetOccupation January 10, 2013 at 9:00 PM

    @Mercedes – I believe getting a discount by paying cash for a big ticket item like a TV would work at a smaller establishment, such as a mom-and-pop electronics store (if such a thing still exists.) The reason stores like Target couldn’t do that would be (1) that if they lowered the price for a customer in one location but not another, they’d go through the same false advertising accusations which Walmart is currently experiencing and (2) The credit card companies would pull their contracts with a big merchant if they were discouraging people to use the service.

  22. Tony@YouOnlyDoThisOnce January 11, 2013 at 8:18 AM

    Cash is certainly STILL king my friend. It helps every single time. LOve the posts, keep them coming!


  23. J. Money January 11, 2013 at 12:08 PM

    @Brian – Nice work man! I seriously need to try this myself the next time – I always suck at negotiating :( Or even *thinking* about it, outside of yard sales/etc at least, haha…

    @Pete – Awesome! Love that!

    @Grayson @ Debt Roundup – For real. I actually just bought a coin off a friend in cash and I’m 99% sure I got it cheaper cuz of that too – not that I intentionally went that route on purpose :) But now that I know about it I will in the future!

    @Joe @ Retire By 40 – That seems to be the consensus here, huh? I didn’t even think of that when posting this up…

    @John S @ Frugal Rules – The rewards DO make it easier/better paying with cads most times, but maybe just for services we try and do cash only and see?

    @Pauline – I think I want to pay cash for my next house – how sexy would THAT be?? :)

    @Kira – Agreed!! And way to go husband!

    @Samantha – Oh yeah!!! Great idea! Cuz I mean it’s the same pretty much as cash anyways, right?

    @Edward Antrobus – Haha.. that kinda solves that one, huh? ;)

    @K – It’s true, you have no decisions in what they do with their money/taxes/etc, except to *not* pay cash if you think they’re gaming the system and you don’t like that.

    @Mrs. Pop @ Planting Our Pennies – Checks??? What are those? ;)

    @Max @ MyWallStreetOccupation – Good deduction!! No doubt would the credit card companies get pissed, ESP at huge retailers like that.

    @Tony@YouOnlyDoThisOnce – Thanks man, glad you’re enjoyint them lately :) Though I’m still a huge fan of credit cards, haha… Can both be King?

  24. Fred the Foxy Finance Blogger January 11, 2013 at 12:28 PM

    You should always ask about discounts before you make an purchase it’s my number one rule to budgeting if I can’t get a discount from a salesman I go elsewhere.

  25. Evan January 12, 2013 at 1:32 PM

    I just saved 5% off moving costs (about $100) when I offered to pay cash. It isn’t just the fees they are saving…it can be the taxes if they never report the transaction

  26. Michael January 12, 2013 at 4:36 PM

    I agree with several others that say this screams of tax evasion. Credit card swipe fees are a few percent. There’s no way that someone would negotiate down 33% to avoid running a card.

    If your friend wants an even better deal, he should turn around and report this guy for tax evasion. ;-)

    Whistleblowers can pocket 15-30% of the funds of recovered. (link)

  27. JMK January 13, 2013 at 8:58 AM

    When travelling in northern europe this summer we used far more cash than we would have preferred for meals. The bill would arrive after the meal, but that was the price for cash. If you wanted to use a credit card they added on a few percent to cover their transaction fees. We weren’t prepared for this at the first place but made sure we had cash for the next day. We still put our hotels on our card (perhaps there would have been a discount if we’d offered cash) because that would have been too much cash to carry around. Different countries, different practices. Of course in Copenhagen, one restaurant we went to charge 2euros per glass of tap water. On this side of the Atlantic we are used to getting certain things for free automatically. It’s good to have a little eyeopener now and then to make you appreciate what you have.

  28. Cat January 13, 2013 at 9:38 AM

    Do you think your service and quality was just the same paying all cash? Do you have the same leverage, like options for dispute etc with all cash?

    Cash worries me, even though I know it’s very smart and can save you a lot of money.

  29. Alex January 13, 2013 at 10:16 PM

    I confess, I was a bit shocked when I realized how much merchants pay for the ability to use credit cards in their stores.

    I always thought I was getting the best deal by accumulating reward points, but paying cash might be a win-win situation for merchants AND consumers. It’s something to think on.

  30. J. Money January 14, 2013 at 10:27 AM

    @Fred the Foxy Finance Blogger – I like it! Though I don’t have the patience to go elsewhere everytime I get denied, haha… that’s pretty impressive you can do that :)

    @Evan – Congrats on the savings! $100 just for 10 seconds of work – way to go.

    @Michael – HAH! Now that is pretty funny… I had never heard of that before, thx :)

    @JMK – Oh yeah! When we were in Prague it was like that too – water cost more than beer!! Something I was NOT complaining about, haha… but you’re totally right – the more culture you get in you, the more you’re aware of the world. I love traveling.

    @Cat – That’s a good question, I’ll ask him :) Though I wonder if it’s better to ask AFTER the work is done, rather than before, ya know? That way it doesn’t mess w/ anything else?

    @Alex – Depends on what’s more important to you really.

  31. Jan January 15, 2013 at 9:33 AM

    i live in europe and paying in cash is mutch more common here. I have never paid with a credit card in a store in my life. If i want something or need something i pay in cash whenever possible. Otherwise i use my debitcard.

    The problem with cash is that it is used sometimes to provide a service without paying taxes.

    1. J. Money January 16, 2013 at 12:44 PM

      Wowwwww so interesting!! I bet you’re more picky on what you end up buying too then, eh?? I can’t imagine never using a credit card! Haha… but at least I pay it off in full every month and reap the rewards that come along with it :) Still though, I bet I spend more in the long run.