16 Cash vs Credit Card Spending Statistics for 2023
This article is part of a larger series on Payments.
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
- Remote and contactless payments continue to boost the use of credit cards
- Younger consumers, higher household income, 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 Usage Statistics
1. Cash payments registered a short-term resurgence after the pandemic at 20% in 2021
According to the 2023 Diary of Consumer Payment Choice by the Federal Reserve, cash payments increased to 20% in 2021 from 19% in 2020. This was brought on by the increase of US consumers going out to storefronts to make purchases, from 80% in 2020 to 82% in 2021.
While cash payments never returned to pre-pandemic levels, the likelihood of these same consumers using an alternative payment method post-pandemic is very low.
2. Alternative payment methods have driven the decline in cash payment 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—31% in 2016 and down to 18% in 2022. Rather, it is primarily driven by the increase in available remote/online payment alternatives.
3. 58% of adult Americans make it a point to have cash on hand
In Pew Research Center’s latest report, an average of nearly six of 10 adults still regularly carry cash. Those aged 51+ carry the most, with up to 71% keeping cash in their pockets. Additionally, the dollar value of cash consumers carry average $73 in 2022—registering a $5 increase from 2021.
4. 69% of Gen Z contributed in the resurgence of cash use
According to Credit Karma, 69% of adults born between 1997 and 2005 say that they have been using cash as a payment method more compared to 12 months ago. This is in response to high interest rates and an attempt to better manage their finances.
One popular TikTok trend, called “cash-stuffing,” involves individuals setting aside physical cash at the beginning of the month in an attempt to control spending. It is being used among 30% of Gen Zs aware of this trend.
5. 23% of Gen Z use cash as their primary payment method
Nearly half of low-ticket purchases for groceries, food, clothing, non-essentials such as coffee, and one-off purchases are made with cash for Gen Z consumers. Sixty-four percent say that using cash motivates them to spend less.
6. 93% of consumers will continue to use cash in the future
Of the total number of US adults interviewed, 93% say that they have no plans of discontinuing their use of cash as a payment method. Only 2% expect to stop using cash in the next two years, while 4% say they no longer use cash to make purchases.
Credit Card Usage Statistics
7. 82% of all US adults had a credit card in 2022
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 2022. 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.
8. 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 for purchases in the last six months. 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.
9. 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 shows 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.
10. Credit cards are still the most popular payment method across all channels in 2022
According to the 2023 Global Payments Report, credit card payments lead transaction types across all channels. Not only does it claim 40% of total POS transaction value for 2022, it is also the top choice for ecommerce purchases and for funding digital wallets. This market share projection is expected to carry through 2026.
11. Peer-to-peer credit card transfers contributed to Cash App’s $4.9 billion GPV for the first quarter of 2023
Block, the parent company of popular Cash App and Square, registered a 24% year-over-year increase in gross payment volume (GPV) for Cash App in Q1 2023, amounting to $4.9 billion. This includes peer-to-peer transactions that were sent from credit cards. Meanwhile, Square’s card-present transaction value increased 10% year over year.
12. 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, while 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.
Cash vs Credit Card Consumer Spending
13. Credit card payments are preferred across all age groups
Preference for using cash is highest for consumers aged 55 and above at 23%, while credit card payments reach up to 36% for consumers aged 25–34. The difference between the range of cash and credit card use reflects the overall popularity of credit cards as a payment method vs cash.
14. Lower-income households use cash 3x more than high-income households
Household income levels are inversely correlated to the use of cash as a payment method. Cash usage among lower-income households is 3x greater than 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 cash as a payment method.
The U.S. 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.
15. Increased in-person payments after the COVID-19 pandemic favored credit card transactions
While consumers made fewer in-person payments in 2022, some establishments such as grocery stores, restaurants, and department stores still saw an influx of in-person transactions after the pandemic. Interestingly, this activity benefited non-cash payments like credit cards instead of cash. The average number of monthly non-cash payments for each merchant type consistently rose in 2020 and 2021, while the use of cash remained the same.
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, 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.
Related: Is it realistic to run a cash-only business in 2023?
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.
