Between the ease of swiping plastic and the rise of mobile payment apps, no one uses cash these days, right?
Not quite. According to a new report by the Federal Reserve Bank of San Francisco, cash actually remains the most popular form of payment used today.
Using data compiled over three days in 2012, the Fed found that not only did nearly everyone in their representative sample of 2,500 Americans use cash at some point, but it was also overall the single most frequently used method of payment. In fact, cash was found to be used in 40% of transcations, with debit cards, at 25%, still relatively far behind. Credit cards made up just 17%, and electronic payments (like paying your cable bill online using your bank account number) and checks both made up 7%.
“This really surprised me, to be honest,” Barbara Bennett, vice president and chief strategist for the Federal Reserve System’s Cash Product Office, told TODAY. But while handing over a stack of bills at the register may seem increasingly antiquated, the research shows that in many situations we actually still prefer it—even when other options are available. In particular, transactions less than $10, and items like food, personal care and entertainment were most likely to be purchased using cash.
Besides the security and anonymity of cash, TODAY also notes that bills and coins may be preferred by some people looking to rein in their spending habits. At LearnVest, we sometimes recommend a temporary all-cash diet of two to three months for people focusing on paying down debt. (A long-term all-cash diet typically isn’t advisable since using credit cards is one of the easiest ways to build credit—and the strength of your credit history can have a large impact on your financial life.) Want to learn more? Read how an all-cash diet helped change three people’s financial lives.