Millennials, Boomers Differ on Cash vs. Credit

A new survey by reveals a generation gap regarding the ways consumers pay for purchases under $5, according to a USA Today report. More than half of all Millennials are likely to use a card, while 77 percent of those over age 50 will use cash.

"I think those people mostly use cash because that's the way we've always done it," stated Senior Industry Analyst Matt Schulz. "But Millennials have grown up doing things like going to school and using a prepaid card to pay for lunch. For a lot of younger folks, cash is just something that they don't carry around."

The trend of using plastic over cash is likely to grow as Millennials and the generation after them grow older, Schulz said, for several reasons:

  • Advances in technology have made paying with cards as fast as paying with cash.
  • Rewards programs make using cards more attractive.
  • Banks have been getting consumers and merchants more comfortable with using cards for decades.

Younger consumers primarily use debit cards, with those ages 18 to 29 favoring debit over credit by a three-to-one ratio, according to the survey. However, this could change in the future due to consumer protections and rewards offered by credit cards.

"As those folks get a little more secure financially, get a little more money in their pockets, they'll start to switch," Schulz said.

Additionally, debit card users may not be taking the downsides into account. "I don't know that they're fully aware of the risk," Schulz said. "In this time of worry about data breaches, if your debit card information gets stolen, you are at risk of losing real money, money you might need to make a car payment or pay the rent."

Credit cards also offer the benefit of helping users build a credit history.

Other key findings of the survey include:

  • Overall, 65 percent of Americans typically pay for purchases under $5 with cash; 22 percent use debit cards; and 11 percent use credit cards.
  • Nearly eight in 10 rural cardholders prefer cash, compared to 62 percent of those who live in cities or suburbs.
  • While 70 percent of Republicans and 69 percent of Democrats who have major credit cards prefer to pay for small purchases with cash, this is true for only 59 percent of Independents.
  • Consumers who graduated from or attended college are significantly more comfortable than others with using cards for small purchases, at 39 percent compared to just 16 percent.

Princeton Survey Research Associates International conducted the survey on July 17-20 and July 24-27. More than 980 credit card holders participated.


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