Cash may no longer be able to boast the same clout it once had for small purchases. Consumers paying for a single pack of gum, a gallon of milk or similarly minor transactions are increasingly turning to plastic.
Although cash still remains king for the smallest purchases, a recent survey byCreditCards.com showed debit is gaining traction as well. Twenty-seven percent of cardholders use their debit cards for purchases under $5.00, an increase of five percentage points from 2014. Comparatively, 11 percent of cardholders use credit for these purchases.
Some experts attribute this increased interest in debit to consumers’ need to get something in return for their purchases. The discounts, loyalty points and personalized offers that often come from purchasing with plastic have powerful appeal. Whether or not these perks hold enough sway over the 58 percent of cardholders still preferring cash for micro transactions remains to be seen.
The payment method consumers reach for when making purchases under $5.00 is often reflective of their ages. According to the survey, consumers ages 18-29 select cash only 36 percent of the time. Cash preferences increase with age, however. Consumers ages 50-64 opt for cash 72 percent of the time, as do 77 percent of those 65 and older.
While older generations may be accustomed to using cash, Millennials and other younger generations have grown up with plastic. It seems unlikely younger consumers will abandon cash altogether, but their preferences for debit over credit may persist. Debit offers a payment method free from the possibility of debt, which Millennials saddled with student loans may crave.
