In the age of credit card loyalty rewards, tap-and-go payments and “buy now, pay later” plans, the idea of using cash to make purchases might have the quaint whiff of yesteryear. Yet paying cash for certain goods and services can actually save you money, personal finance experts say.

With total credit card balances in the U.S. reaching $1.1 trillion in 2024, now may be a good time for consumers to whip out their greenbacks or their debit cards, particularly when it comes to the following expenses.

Gas 

Is it cheaper to buy gas when you pay in cash versus a credit card? At many stations, yes. Known as “dual pricing,” discounts on gas paid for in cash typically range from 5 cents to 10 cents per gallon, according to NerdWallet, though discounts can reach 40 cents at some stations.

The reason for dual pricing: credit card fees. Gas stations, more than 60% of which are independently owned, pay fees to credit card issuers on every transaction that uses plastic, whether to fill the tank or buy a bag of chips. 

To offset those card processing fees, some stations offer customers a lower price for cash payments. Legal in all 50 states, cash discounts are usually prominently displayed on price marquees at gas stations. 

Notably, whether debit card payments are treated as cash depends on the station. Some stations only offer discounts when you pay with actual bills and coins. In that case, you’ll likely first have to pay a clerk inside the station before the pump is activated. 

If you’re serious about trying to save money, meanwhile, refrain from impulse buys, like food, while filling up. A single hot dog could eat up your cash discount.

Word of warning: When using a debit card at the pump, be on the lookout for “skimmers,” or devices fraudsters attach to card readers to steal your debit or credit card information as you swipe (See here for FBI tips on how to protect your debit card.)

Groceries

Between grocery shopping and restaurants, Americans are spending more of their income on food than they have in 30 years. Making matters worse, shoppers are increasingly relying on credit cards to make ends meet. Six in 10 adults, or 60%, used credit cards to buy groceries in 2023, according to a May report by the Urban Institute.

By contrast, using cash to buy groceries is good way to rein in overspending in the supermarket aisle. That’s because limiting grocery purchases to a set amount of cash forces you to stay within budget and make more practical decisions, such as choosing a large container of whole oats over smaller flavored packets. And by shopping with cash, you’ll give your credit cards a break, enabling you to start paying off outstanding balances.

Monthly savings from using cash at the supermarket can be as high as 25%, according to Business Insider. Savings could be even greater, according Forbes, which found that consumers are likely to spend twice as much when using a credit card instead of cash.

College tuition

Given that the average tuition for private U.S. colleges now tops $40,000 a year, it’s no wonder that some parents with kids in school are forced to turn to credit cards, while others see value in racking up points or travel miles.

But using plastic to pay for tuition comes with a number of caveats that experts say likely outweigh any benefits. First and foremost, according to GoBankingRates, among the growing number of colleges and universities that accept credit card payments for tuition, most include a 2% to 3% surcharge that would negate any advantages derived from rewards, which average around 2% back on non-food purchases. 

One of the biggest reasons not to pay for college with a credit card is also the most obvious: interest on missed payments. With annual percentage rates currently at a record-high average of 22.76%, it’s easy to see how quickly your balance could explode if you miss any payments on major tuition charges. 

For this reason alone, most experts strongly advise that people avoid using a credit card to pay for college.

“I think even going for a zero percent promotional rate is too risky because this could be a big charge, and the interest rate would skyrocket at the end of the term,” Ted Rossman, credit card senior industry analyst at Bankrate.com, said in a recent report on the personal finance site.