Is Cash Becoming a Thing of the Past?
Do you carry any cash in your wallet? We often hear people say things like “I never carry any cash” or “I use my card for everything, I don’t hold onto cash.” More and more people are going cashless and always paying — even for small purchases — with a debit or credit card.
A new survey by CreditCards.com, which you can view here, asked around 1,000 respondents how they pay for a small purchase of $5 or less. When you buy one item at the grocery store, a bagel for breakfast, a magazine, or a cup of coffee, do you use cash or a debit or credit card?
Who’s still using cash?
Around two out of three cardholders are still using cash for small items that cost less than $5, and the other one-third are paying with credit or debit (11 percent are using credit and 22 percent pay with debit). Based on the survey results, it seems factors like age, education, and other demographics play a role in whether we choose cash or plastic.
Those in the 18-to-29 age group (millennials) are the only age group to prefer plastic over cash for these small purchases. This age group also strongly prefers debit over credit by a ratio of almost 3-to-1. As the age group of respondents increases, so does their preference for cash. In the 50-and-older age group, almost eight out of 10 (77 percent) prefer to use cash for small transactions.
Those in the over-50 age groups have managed a budget and household finances during a time when cash was more common, and writing paper checks was — and for some, still is – a common form of payment, as well. According to a Federal Reserve report from late last year, the number of checks paid decreased to 18.3 billion in 2012, less than half the number of checks paid in 2003.
Of those surveyed by CreditCards.com, college attendees and college degree holders (around 60 percent use cash) were less inclined to use cash for small purchases than those with only a high school education (around 80 percent use cash). People without children are more likely to use cash than those with children, and those who live in rural areas are more likely to use cash than city dwellers for these small purchases.
Why we like plastic
What is it about these small plastic cards? With all of the technological advances in banking, transactions are quick and convenient, and they can show up in an account relatively instantly. Using a debit or credit card has become more and more user friendly – fun, even.
“Rewards have become a common feature of credit cards, with two out of three credit cards offering rewards, encouraging rewards chasing. Debit cards, with their balances available instantly and online, have largely replaced paper checks and tedious manual records,” according to the CreditCards.com survey analysis.
It is quick and easy to pay most bills these days, and most transactions can be completed online from a home PC. You can’t pay in cash while sitting on your couch. The automatic record keeping that comes along with using plastic — that instant proof of purchase on your bank or credit card statement — is also an added perk for some people. Cash generally requires holding onto a receipt.
What the future may hold
With this many people already using plastic for purchases under $5, we have to wonder if everyone will stop using cash as the primary method of payment sometime in the future. Will cash become an old school means of payment that is still accepted but not widely used?