Could Paying Cash Save You Money? Here's What Mark Cuban Says
- Mark Cuban is a savvy businessperson who knows how to negotiate.
- He says that if your goal is to save money, paying cash could be the key.
Here's what one successful investor has to say.
There's a reason so many consumers use credit cards to make purchases, whether it's everyday items like gas and groceries or larger purchases, like furniture and electronics. Credit cards reward you for the things you buy, and that's cash back you might as well enjoy.
But these days, the cost of goods and services is higher due to rampant inflation. And so it's more important than ever to do what you can to save money on your purchases.
If you ask Shark Tank personality Mark Cuban, you shouldn't be afraid to negotiate when you want a better price. But if you're going to go this route, be prepared to ditch your credit cards and pay for your purchases in cash instead.
Paying cash could save you big time
Mark Cuban insists that in the course of negotiating, cash is a powerful tool. Imagine you need to pay for a home repair and you're quoted $2,000 to get the work done. That $2,000 estimate might assume you'll be charging that expense on a credit card, which means the company at hand is going to lose some money to credit card fees.
In that situation, you may be in a position to negotiate the price of that repair down -- say, to $1,900 -- by offering to pay in cash. That way, the company gets its money on the spot and doesn't have to worry about added fees.
Similarly, say you walk by a kickboxing class that costs $50 and the marketing person at the door encourages you to sign up on the spot. If you tell that person you'd love to join but you only have $40 in cash on you and don't have your credit cards, they might agree to accept that price if it means filling in another slot.
Paying cash could also help you avoid overspending
If you're someone who isn't afraid to negotiate, then cash could be your ticket to success. But that's not the only reason to start relying more on cash and less so on credit cards. Sticking to cash could also help you keep your spending in check.
Imagine you hit the store with a small shopping list but are tempted to engage in some impulse buying when you see enticing items on sale. If you have a credit card on you, and you haven't maxed it out, all you need to do is swipe it at the register and be on your merry way. But if you don't have a credit card on hand and are limited to the cash you have in your wallet, you may be more likely to skip those unplanned purchases and stick to your original list.
In fact, some financial experts, like Dave Ramsey, are convinced that credit cards are downright dangerous and should be avoided at all costs. Now that's a more extreme view, and the reality is that credit cards can actually be a money-saving tool in some regard. Not only do they commonly reward consumers for purchases, but they can also offer protection in situations where a merchant won't stand behind its goods or a company won't stand behind its services.
But if you have a tendency to go overboard on spending, it could pay to steer clear of credit cards for a while and stick to cash. And if you're ever in a situation where you need to negotiate the price of something you're paying for, make sure to use cash as a key bargaining tool.
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