cash vs credit card usage

Cash Vs. Credit Card Usage Statistics 2022

May 14, 2022

For the longest time, cash has been the reigning and most popular payment method for people all over the world, but this is rapidly changing. The adoption of cashless societies and virtual forms of payment is going up, an evolution that has probably been sped up by our experiences with the COVID-19 pandemic.

While cash is still fairly popular in the U.S., it’s quickly losing ground to debit cards and even credit cards. And there are a lot of interesting conclusions we can draw from the data surrounding the usage of these payment methods.

In this article, we’ll go over the statistics for credit, debit, and cash payments and general use, as well as discuss what we can glean from these numbers.

Credit Card Vs. Cash: Which Is More Popular?

Normally, cash reigns above all when it comes to popular forms of payment, but this is quickly changing. For the first time since the Diary of Consumer Payment Choice started to report in 2016, credit card payments surpassed cash payments during the year 2020. Cash payments went down 7% from 26% to 19% between 2019 and 2020, a decline which can most likely be attributed to the pandemic.

Credit card payments, on the other hand, rose from 24% to 27% of all payments within the same time period.

However, the most used form of payment was actually debit cards, with 28% of all payments made using this medium. Debit cards accounted for 10 of the 35 payments made on average every month.

It’s important to note that these numbers were affected by the pandemic in more ways than one. Not only was cash far more complicated to use during this time, but also only shopping rose due to the social distancing and isolation measures, and the number of payments made overall decreased.

Statistics for Credit, Debit, and Cash Payment Usage

Here’s some data regarding the use of debit cards, credit cards, cash, and their preference:

  • In general, 80% prefer to pay with cards over cash.
  • 76% of all Americans have at least one card, and the average credit card holder has at least 3.
  • The average transaction with cash is $22, and without cash, it’s $112.
  • The average transaction with credit cards was $57.
  • Debit cards are used for 67% of card payments, and 28% of all payments.
  • Cash is more frequently used in low-income households, with 47% of all transactions being made with cash in households with less than $25,000 a year.
  • The total value of money spent went up from $4,236 to $4,760 in 2020.
  • Only 10% of people use only cash, but at least 88% of consumers use cash occasionally.
  • The average person held $74 in cash in their pockets, wallet, or purse during 2020 (up $20 from 2019)
  • The average person uses 3 to 4 payment methods each month, with more than 90% of households using more than one payment method.
  • 52% of all active credit cards carried a balance during 2021, and as of the fourth quarter of that year credit card debt was standing at $856 billion.
  • Card payments are going up in frequency and quantity
  • In-person payments decreased by 7% from 87% to 80% between 2019 to 2020, while not-in-person payments went up from 13% to 20%.
  • Only 72% of people surveyed reported making an in-person payment within 3 days of the survey, down from 91% in 2019.
  • ATM withdrawals are going down in number, but the amount withdrawn each time is increasing.
  • 45% of people prefer to store their card information online for future purchases.
  • 38% of card users mentioned the reason they prefer cards is their convenience of use when compared to cash. However, 51% of them said that the high-interest rates of credit cards are a significant drawback.
  • Overall, people aged 65 and older account for the highest amount of cash usage, with 26% of them making their payments in cash. By contrast, people aged 25 to 34 only make 11% of their payments in cash.

What the Data Tell Us

There’s a lot we can infer and learn from the statistics seen in these reports. For starters, the pandemic has significantly changed our relationship with money and the way we make our payments

While in-person and cash payments have historically been preferred, virtual payments and payments made with cards went up significantly during 2020. However, given that this was the result of strict social distancing and isolation measures driven by efforts to mitigate the effects of the pandemic, it remains to be seen if this will result in long-term change.

But even if that hadn’t been the case, the truth is that cash has been going down in recent years in favor of debit card and credit card payments.

Cash was behind debit and credit cards for all age groups except those aged 65 and older, with younger generations preferring to use debit cards.

In general, debit cards seem to be replacing physical cash as the preferred form of payment. According to the report, people that prefer cash used their debit cards as backup twice as much as they used their credit cards.

Cash in general seems to be preferred for smaller transactions, with the majority of payments under $10 being in cash. For payments between $10 and $100, credit cards and debit cards make up about 60% of the payment share.

And while the number of payments went down overall, their average transaction size increased significantly. The average person spent $326 during October of 2020 in non-bill payments, up from $265 in 2019.

Final Thoughts

Credit card and debit card spending is going up, and cash is on its way down. This is not surprising given the recent economic turmoil, the challenges presented by the pandemic, and the increased popularity of online shopping.

However, it remains to be seen if the changes will stick, as one of the main factors for the switch in popularity from cash and in-person payments to cards and virtual payments was the pandemic.

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