Springfield, IL will soon do what many of its residents do to save money: start using a cash back credit card. The budget director, Bill McCarty, announced that the city wants to expand the ways in which it makes payments to vendors in order to get a cash back reward each time it makes a payment.
The city has long made payments by check and credit card, but it hopes to start using a new credit card to make even more payments, and thus increase the amount it saves when one considers the total cash back reward. The city will partner with PNC Bank, which issues the Visa Procard. PNC Bank will give the city one-half of one percent of all spending it already made on its credit card this year along with a .95% cash back reward for each dollar spent once the city spends $2 million or more.
The revenues will help the city siphon money to a general purpose fund and ultimately shave nearly one percent off all purchases made each year.
The move also has benefits for companies that supply the city with goods and services. Receiving a credit card payment is essentially instantaneous while receiving a check can take weeks or months. Vendors will naturally have to pay a small fee to process the credit card payment, but receiving cash more promptly from the City of Springfield could be a worthwhile proposition.
One would expect that many cities would have already adopted similar programs. McCarty noted that more than 30 city employees have city-issued credit cards, but that the use of credit cards by the city was still far less than what it could have been. To budget directors everywhere: start thinking about using a cash back card to make city-related payments.