Special discounts for using a credit card and special discounts for using cash?

by Alex Garrity on June 15, 2013

Most credit card companies entice new customers simply by offering rewards programs and huge discounts or cash back on their purchases. In a similar vein, some stores have started offering customers cash back rewards and discounts on using cash to pay their bills. Here’s a few things you should know.

Special Discounts for Using a Credit Card

I have a confession. I hate carrying money with me. At any given time, I would not have more than $20 in my wallet. So I always like to pay with my credit card. One reason is that with every purchase I make, I accumulate some points on my card. These points can later be redeemed for various goods and services.

This is not a direct discount, but a great way to build customer loyalty. Some credit card companies, together with stores and vendors, offer discounts to promote sales. For instance, a company may offer you a discount at a restaurant if you choose to pay your bill with their credit card. There are other similar schemes like cash back rewards. So for every purchase, you get a percentage of the money returned back to you. This is another way to give a very attractive discount.

Some credit cards have a whole list of outlets and vendors who offer discounts on the use of the particular credit card. So every time you make a purchase from these partners, you get attractive discounts in return. This is a win-win scenario. As a consumer, you get a discount. The vendor makes a sale and markets his products. The credit card makes a sale as well. So actually, everybody wins.

Though instant discounts are provided by very few credit card providers, they still exist. Credit card discounts encourage a lot of people to proactively use their cards for making payments.

Discounts for Using Cash

In recent times, when credit cards have become so popular, a lot of vendors and stores have introduced discounts for using cash to make payments. This step has been taken specifically to encourage people to use cash when paying their bills.

A lot of times, this approach works and improves the liquidity of the cash strapped vendors and outlets. Banks too, may promote such discounts so that people start using their actual money more. Since most people are like me and prefer carrying cards than actual money, this step is almost necessary for those who are in immediate need of cash.

Usually, when you make a payment with a credit card, the vendor has to give a percentage of it to the credit card company. They also have to wait for the credit card companies to transfer cash into their accounts. Therefore, for them to instantly get their hands on some money, and to avoid the commission they pay to the credit card companies, offering discounts on cash purchases seems to be the easy way out.

However, this is still not much in practice as most people would anyway prefer to use their credit cards for payments.Therefore, you will rarely come across a store that offers discounts on cash purchases.

Which credit cards do you own and use? Would you get a new credit card just to avail discounts?

Courtesy of CreditCardShoppe.com

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