Millennials Prefer Plastic to Cash for Small Purchases

Cash is still king for the older crowd when it comes to purchases of less than $5.


If your cup of coffee is less than $5, chances are you’re going to pull out cash to pay for it, unless you’re a millennial. Then you’re more likely to whip out plastic, regardless of how big or small your purchase is.

According to a recent survey by CreditCards.com, cash has long been king when it comes to small purchases (less than $5). Overall, about two-thirds of credit card-carrying Americans pay for small purchases with cash, 22 percent use debit cards and 11 percent use credit cards.

But the younger generation is helping to change those figures.

CreditCards.com said:

The generational divide is striking. A slight majority (51 percent) of consumers 18-29 prefer plastic to cash, the only age group to do so. A preference for cash becomes stronger in each advancing age bracket, until at age 65-plus, 82 percent prefer cash.

Financial experts say paying with plastic isn’t bad. But millennials are using debit over credit by a near 3-to-1 ratio. Debit cards offer fewer protections for consumers. Plus, they don’t help build credit.

Both offer solid protection from fraud in case your card is lost or stolen, particularly if you report the disappearance in a timely fashion. However, Matt Schulz, senior industry analyst for CreditCards.com, told MarketWatch:

“If your debit card information gets stolen, somebody can take real money out of your account that you won’t be able to use to make a car payment or a doctor’s bill,” Schulz says. “That money may be gone for a week or two.”

Some people opt to pay with a debit card because they’re trying to be money-conscious, limiting their purchases to money they have. Bloomberg Businessweek said:

Debit cards work a lot like cash because the money comes straight out of a checking account. A credit card is more complicated. It can be a better choice than a debit card if you pay off your card in full each month because you get what amounts to an interest-free loan and rewards points to boot.

Other survey findings include:

  • Got kids? Parents are more likely (41 percent) to use cards to pay for purchases under $5 than people without kids (30 percent). As a parent, I usually don’t have enough free hands to fiddle with change, so using a card is easier.
  • College-educated are comfortable with plastic. Americans who have graduated or attended college use plastic twice as often (39 percent) to pay for small purchases than their counterparts who haven’t attended college (22 percent).
  • Politically, we’re on the same page (about one thing, at least). When it comes to paying for a small purchase, 30 percent of Democrats and 28 percent of Republicans prefer plastic to cash.

I rarely carry cash. But if I have it on hand, I use cash to pay for small purchases.

Do you use cash, credit or debit to pay for small purchases? Share your comments below or on our Facebook page.

Stacy Johnson

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