Cash versus credit: Report looks at how people pay for smaller purchases

WASHINGTON — For most Americans, cash is king when it comes to small purchases, but a new report finds that younger spenders don’t feel the same way.

About two in three credit card holders use cash for small purchases, but the tides are turning as younger spenders adopt different habits, according to report from The credit card review website released the study earlier this week.

Overall, 65 percent of Americans typically pay for purchases under $5 with cash. Of that number, 22 percent use debit cards and 11 percent used credit cards.

Preferences are different depending on age, the report found.

Seventy-seven percent of people age 50 and older prefer cash, and 52 percent of buyers between 18 and 49 years old lean toward cash, too.

On the other hand, millennials — ages 18 to 29 — are the only age group to prefer plastic over cash. Fifty-one percent of millennials prefer paying with cards.

Also, millennials with credit cards prefer debit over credit by a ratio of nearly 3-to-1.

Overall, card users prefer debit to credit by a 2-to-1 margin — a trend that Matt Schulz of says may change in the future.

“I have a feeling what will happen when we do this survey again in the future, is that I think we will see more people trending away from debit cards to credit because of some of the protections credit offers,” he says.

Protections can be helpful as consumers encounter more instances of hacking, breaches and theft with cards.

Should someone try to make a charge with a consumer’s credit card information, no actual money can be taken away from the account, Schulz notes. If a debit card is used fraudulently, the money can be taken out of the account and it could take about a week or more to replace, he adds.

“That’s time when you won’t be able to use that money for a mortgage payment or a car payment,” he adds.

Even though cash is preferred for smaller purchases, there is a noticeable shift to card use — a trend that can be attributed to technological advancements, among other things, Schulz says.

“Cards offer so much detail online about what you’re spending money on and how much you’ve spent. It can be a good tracking tool,” he says. “That’s something you don’t really get with cash.”

Princeton Survey Research Associates International conducted the survey in July and contacted a representative sample of 1,497 adults, 983 of whom had a major credit card — American Express, Visa, MasterCard or Discover. The margin of sampling error for the cardholders is plus or minus 3.7 percentage points.

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Sarah Beth Hensley

Sarah Beth Hensley is the Digital News Director at WTOP. She has worked several different roles since she began with WTOP in 2013 and has contributed to award-winning stories and coverage on the website.

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