Cash Still Reigns Supreme

The payment form ranks at the top for most Americans.

January 25, 2012

NEW YORK - Despite the growing popularity of credit and debit cards, a new report from Javelin Strategy & Research found that most Americans still prefer to pay with cash when it comes to small, everyday purchases, the HuffingtonPost reports.

More than three-quarters (79%) of consumers indicated they had used cash for purchases in the last week, while around 65% of credit and debit card users said they paid with plastic during the past seven days.

The Javelin report also questioned if consumers would still use debit cards if they had to pay a fee ?" the majority of those surveyed said they would replace their debit card with checks and cash, while a mere quarter said they would switch to credit cards.

With the future of debit cards more unknown, cash has risen in popularity, especially for smaller purchases like coffee or food, said David Albertazzi, an Aite Groupe senior research analyst. "We will see consumers convert [back] to cash for smaller transactions and credit card use will increase this year."

The usage of cash indicates that Americans would rather not increase their debt by using credit cards, which spells good news for consumers and small retailers, and not-so-good news for banks, which will have less revenue from transaction fees.

To recover a dip in revenue, banks have started cajoling consumers to use credit cards. "[Financial institutions??] new messaging is that rewards are around something specific," said Beth Robertson, Javelin director of payments research. "And to get [consumers] to use credit more actively, especially if the price point is $11 or below."

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