Credits: Social Media
Paying with cash is a giveaway that you’re not wealthy, according to new study
Paying for goods and services with physical cash – whether that be coins or notes – is as old as currency itself but the use of cash in todays modern world tells us a lot about our society and a recent study has shown that youre more likely to pay with cash if youre less well off.
Use of cash is declining
Thanks to the advent of contactless credit/debit cards and smartphone payments, the use of cash in payments has steadily been on the decline for years according to a survey carried out as part of a 2023 study by the Federal Reserve Bank of San Francisco.
This is shown in a 5% drop in cash use between 2016 and 2019, with the percentage of transactions using physical money falling from 31% to 26%. According to survey respondents, the biggest reason for this change was the increased convenience of card payments and a better ability to keep a record of payments.
What had been a relatively gradual shift was fast-tracked in 2020 thanks to the outbreak of the Covid-19 pandemic as shoppers reduced their use of germ-carrying physical money, more stores began to accept contactless card payments and an increasing amount of people began shopping online.
Since the peak of the pandemic, the use of cash has not recovered and in 2022, the percentage of cash payments stood at just 18%.
- 2016 | 31%
- 2017 | 31%
- 2018 | 26%
- 2019 | 26%
- 2020 | 19%
- 2021 | 20%
- 2022 | 18%
Despite the reduction in cash payments, its unlikely that physical money will disappear entirely in the immediate future. People in certain professions such as tradespeople or service staff still rely on cash payments and tips. On top of that, using physical money to pay for goods offers more privacy than digital transactions using a card or smartphone.
How household income impacts cash use
Another area that the FRBSF study touched upon was how likely it is for people in certain demographics to use cash.
Incredibly, there is a huge difference in the likelihood of using cash depending on someones household income.
People who earn less than $25,000 a year are over three times more likely (36%) to use cash when paying for something than a person earning over $150,000.
This trend continues through the various income brackets, with those earning more typically using cash less often.
- Less than $25,000 | 36%
- $25,000 – $49,999 | 23%
- $50,000 – $74,999 | 19%
- $75,000 – $99,999 | 15%
- $100,000 – $149,999 | 15%
- $150,000+ | 10%
How age impacts cash use
Something that should come as less of a surprise is that older people tend to prefer using cash over younger generations.
For example, the percentage of people who use cash between the ages of 18 and 44 sits in a range between just 12% and 13%.
In comparison, 23% of survey respondents over the age of 55 said they still paying with cash.
- 18 – 24 | 13%
- 25 – 34 | 12%
- 35 – 44 | 13%
- 45 – 54 | 16%
- 55 – 64 | 23%
- 65+ | 23%
What is slightly more surprising is that before the Covid-19 pandemic, the use of cash among 18-24-year-olds (32% in 2016) was on par with over-65s (33% in 2016). However, while more older people have stuck with physical money, younger spenders have not.
