Although we are heading toward a cashless society, cash seems to still prevail in some sectors in the US and around the world. As business owners, a major part of decision-making involves providing customers with the utmost convenience at checkout.
These cash vs credit card spending statistics can guide merchants in balancing their payment acceptance setup to maximize profit.
Key Points:
- Credit card use is on the rise; however, cash is not disappearing anytime soon.
- Remote and contactless payments continue to boost the use of credit cards.
- Younger consumers, higher-income households, and those with a bank account prefer credit cards over cash as a payment method.
- Consumer financial stability is driving the resurgence of cash payments after the COVID-19 pandemic.
- Government support of cash factors in the sustained adoption of cash as a payment method.
Cash vs Credit Cards at a Glance
The general trend for cash vs credit cards is the preference for cash among older adults and lower-income households, while credit cards dominate among adults aged 25 to 54 and those with higher incomes. Although 82% of adults had a credit card, more than half of adults still regularly carried cash.
Cash Usage Statistics
1. The share of cash payments has decreased for two years in a row since 2021
According to the 2024 Diary of Consumer Payment Choice by the Federal Reserve, the share of cash payments decreased to 16% in 2023 from 20% in 2021. For the first time since 2016, the share of credit card payments has been greater than the share of cash payments in any year, and the combined shares of credit and debit card payments totaled 62% in 2023 from 45% in 2016.
2. Alternative payment methods have driven the decline in cash payments since the pandemic
The same Federal Reserve report says that the decline in cash payments after the pandemic is not because of consumers’ waning preference for cash, which was already in a steady decline. Rather, it is primarily driven by the rise of available remote or online payment alternatives.
The average number of cash payments has remained steady since 2021 at 7 cash payments, but the average number of total payments increased from 36 in 2021 to 46 in 2023. This means consumers are using cash just as frequently but are making more payments in other forms as well.
3. 58% of adult Americans make it a point to have cash on hand
In Pew Research Center’s latest report, six of 10 adults still regularly carry cash on average. Those aged at least 51 carry the most, with up to 71% keeping cash in their pockets. Additionally, the dollar value of cash consumers carry averaged $73 in 2022—registering a $5 increase from 2021.
4. Consumers 55 years and older are around 1.5 times more likely to use cash than consumers below 55
The generational gap in cash use has become more evident after the pandemic. Adults who are 55 years or older used cash for 22% of their transactions, while those aged 25 to 54 used cash for only 12% of their purchases.
5. 92% of consumers will continue to use cash in the future
Of the total number of US adults interviewed, 92% say that they have no plans to discontinue using cash as a payment method. Only 1% expect to stop using cash in the next two years, while 5% say they no longer use cash to make purchases.
Credit Card Usage Statistics
6. 82% of all US adults had a credit card in 2023
According to the latest credit card spending statistics from the Federal Reserve Report on Economic Well Being of US Households, 82% of all US adults had a credit card in 2023. Younger adult Americans and those with lower income levels are less likely to have a credit card and often carry revolving balances when they do.
7. 33% of US credit card holders increased spending driven by inflation
The latest PYMNTS research on credit card use reveals that, on average, 33% of credit card holders in the US increased their reliance on credit cards in 2023. 43% of those who have been more affected by the rising cost of living have turned to the use of their credit cards to make ends meet.
8. Rewards and cash-back programs are the most popular reasons for increasing spending for nearly 15% of US credit card holders
The same US credit card spending data show that 14.9% of credit card holders increase their spending to earn rewards and cash back. Of all the credit card’s value-added features, 30% favor rewards and cash back over tracking and managing features such as transaction monitoring, autopay, and mobile apps.
9. Credit cards continued to be a popular payment method across all channels in 2023
According to the 2024 Global Payments Report, credit card payments lead transaction types across all channels. Not only does it claim 41% of total POS transaction value for 2023, it is also the top choice for ecommerce purchases and for funding digital wallets.
Although digital wallets are showing huge increases in use for both POS and ecommerce transactions and are projected to dominate as a payment method for various channels leading up to 2027, 36% of digital wallet transactions are funded by credit cards.
10. 37% of US shoppers have used virtual credit cards
According to Klarna research, 37% of American consumers have used virtual credit cards to make purchases, 29% have heard of virtual cards but have not used them, and 33% have not heard of virtual cards at all. Of those who have tried, 68% cite convenience as the primary consideration.
Additionally, at least 55% of US shoppers across age demographics prefer using virtual cards for online purchases. This includes 81% of consumers aged 25-40, 75% of those aged 18-24, 72% of shoppers aged 41-56, and 55% of those aged 57-75.
11. Older adults use their credit cards for convenience, while younger adults use their credit cards to build their credit score
According to an Ipsos survey, 70% of adults aged 18 to 34 years use their credit cards to build and improve their credit scores while 63% of adults 55 years and older use their card primarily for convenience.
In-Store Payment Method Statistics
12. Cash is still the most commonly used in-store payment method
According to a YouGov survey, cash still dominates in-store payment methods, with 67% of shoppers favoring it for physical transactions. For brick-and-mortar stores, maintaining cash as an acceptable payment method is still essential to accommodate customer preferences, particularly those who might not have access to credit cards or prefer to manage their spending more tightly.
Despite the rise of digital and cashless payments, the flexibility and anonymity of cash make it a necessary option for many consumers.
13. Debit cards are the most popular payment method at points of sale in the US, followed by cash, and then credit cards
Cash is more used by US consumers at points of sale compared to credit cards, with 60% of shares for cash payments and 48% for credit card payments. However, debit cards take the top spot with 64% of consumers preferring to use them at points of sale.
This suggests that although consumers like the convenience of card payments, they prefer methods that offer immediate access to funds (not credit) and direct expense control.
Cash vs Credit Card Consumer Spending
14. Credit card payments are preferred across all age groups
Preference for using cash is highest for consumers aged 55 and above at 22%, while credit card payments reach up to 35% for consumers aged 25-54. The difference between the range of cash and credit card use reflects the overall popularity of credit cards as a payment method vs cash.
15. Lower-income households use cash 3× more than high-income households
Household income levels are inversely correlated with the use of cash as a payment method. Cash usage among lower-income households is 3× greater than of consumers with an annual household income of $150,000 and above. As the household income increases, the use of cash decreases, and the use of credit cards as the payment of choice increases.
That said, cash does not entirely disappear for households with higher income levels as the US government continues to encourage the use of cash. It has also taken legislative steps to support using cash as a payment method.
The US Payment Choice Act of the 117th Congress protects unbanked and low-income households by ensuring that retailers continue to accept cash as a form of payment.
16. 23% more US adults are willing to try new credit card payment methods over cash
According to the New Payments Options Report by PYMNTS, 52.9% of consumers are open to adopting new card payment methods (credit cards, debit cards, and stored cards), while 29.9% say they prefer cash or checks. The percentage varies by age and income level but still shows card payments to be significantly favored across all brackets.
Methodology
The statistics in this article were compiled from various reputable sources to ensure accuracy and relevance. Key data points were drawn from consumer surveys conducted by established research firms and government bodies, industry reports, and financial studies by organizations, such as the 2024 Diary of Consumer Payment Choice by The Federal Reserve, Worldpay Global Payments Report 2024, and Economic Well-Being of US Households in 2023 by The Federal Reserve.
These sources were selected for their comprehensive coverage and reliability in tracking payment trends. Data were then cross-referenced and analyzed to present a balanced view of cash versus credit card spending behaviors.
Bottom Line
The advancing payment landscape driven by consumers’ demand for convenience and security highly favors cashless transactions, where credit card payments have the advantage. On the other hand, there still remains a strong core of cash payment users who, as the numbers suggest, are not disappearing any time soon.
In light of these trends, businesses should take a closer look at their customer demographics and use these credit card vs cash spending statistics to plan the right combination of payment methods and choose a merchant account provider that best matches their needs. Learn more about merchant accounts.
