NORTH PALM BEACH, Fla. (5/13/14)--What's in your wallet? A $20 or smaller? According to the May Financial Security Index from Bankrate.com, two of five consumers carry less than $20 cash on a daily basis.
Instead of greenbacks, consumers are using alternatives such as debit cards, prepaid gift cards, credit cards and smartphones with electronic payments apps.
The electronic payments industry "is doing a good job shifting people away from cash," said George Peabody, a payments strategist at research firm Glenbrook Partners (Bankrate.com May 12). But, he added, "Cash is going to be remarkably resilient. I'm not expecting cash to disappear anytime soon."
On a day-to-day basis, more than two-thirds of the respondents carry $50 or less, 49% have $20 or less in their pockets, and 9% said they don't carry cash at all.
Women tend to carry less cash than men which, said Bankrate's chief financial analyst Greg McBride, suggests that some women "may prefer to carry less cash than men so as to reduce the risk of being a target for criminal activity."
Carrying cash can have a psychological effect on spending. University of Missouri student Hannah Cushman, 22, told Bankrate that if she has cash, not only does she spend it, but she also spends more on her debit card. "It's a weird kind of wealth effect," she said.
Cash is the dominant payment form for transactions worth less than $10, according to an April report from the Federal Reserve. It's most commonly used for gifts, transfers to people, food and personal care.
However, data security breaches like the one at retail giant Target have made some consumers wary of plastic payments. A March survey by cybersecurity firm Feedzai found that 40% of consumers who knew about data breaches were using cash more often and plastic less so (The Wall Street Journal March 21).
Natural disasters are an example of where cash is still important, said Paul Sullivan, vice president/general manager of Agility Recovery (News Now April 30). "We all know that during a major event cash is always king. You may not always be able to use cards because services could be down."