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Using cash for small purchases shows a consumer's age

A recent study found that consumers under age 30 are much more likely to use plastic even to pay for purchases under $5.

October 30, 2014 by Dan Kramer — Senior Vice President, Marketing & Merchant Servic, SHAZAM

Not surprisingly, the shopping and payment habits of millennials differ greatly from older generations. For instance, whether it's debit or credit, millennials are far less likely to hand over paper money.

In fact, a recent study found that consumers under age 30 are much more likely to use plastic even to pay for purchases under $5. The survey, conducted by Princeton Survey Research Associates International for CreditCards.com found that 77 percent of people over 50 pay for $5 purchases with cash, compared with just 48 percent of 18–29-year-olds.

Among all consumers using a card to pay for an item costing less than $5, 22 percent use debit cards and 11 percent use credit cards, according to a CUNA News Now report. Among millennials, the ratio is almost 3-to-1 in favor of debit cards.

Even among people between the ages of 30 and 49, just over 50 percent would pay for a small item with cash, meaning that nearly half are handing over a card for that pack of gum. Among those over the age of 61, 82 percent would use cash for a small purchase.

"Millennials have grown up doing things like going to school and using a prepaid card to pay for lunch," CreditCards.com senior industry analyst Matt Schulz said in a press release. "For a lot of younger folks, cash is just something that they don't carry around."

Education also plays a role in cash or card preferences. Those who graduated from or attended college are 39 percent more comfortable using cards for smaller purchases, compared with 16 percent of those without higher education. Income levels have little or no impact on consumers' decision whether to use cash or credit for smaller purchases.

photo courtesy of klueske | flickr

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