More Americans may be paying with plastic these days, but a recent study found that ATMs remain essential as cash is still the No. 1 choice of consumers when it comes to smaller purchases.
Research from CreditCards.com found that when it came to more minor transactions, those costing less than $5, nearly 65 percent of people said they use cash. This is in comparison to only 22 percent saying they would use debit cards and 11 percent saying credit cards would be their payment method of choice.
The divide between cash and plastic becomes clearer when viewed across age brackets.
"A slight majority (51 percent) of consumers 18 to 29 prefer plastic to cash, the only age group to do so," the organization reported. "A preference for cash becomes stronger in each advancing age bracket, until at age 65-plus, 82 percent prefer cash."
Interestingly, people from all backgrounds still prefer cash. Only 30 percent of self-described Democrats and 28 percent of Republicans would chose credit or debit cards over cash, showing demand for access to ATMs remains more important than ever.
This data supports a recent report from the San Francisco Federal Reserve Bank showing cash is king for 40 percent of consumer transactions.
"In October 2012, the average American consumer had 59 transactions, including purchases and bill payments, and 23 of these 59 payments involved cash," the report, titled "Cash Continues to Play a Key Role in Consumer Spending," stated.
The same study showed that debit cards represent 25 percent of consumer transaction activity, followed by credit cards at 17 percent, electronic methods and checks at 7 percent, and all other payment types at less than 5 percent.
With this in mind, banks and other institutions would be wise to focus on installing ATMs to give consumers access to their preferred payment method.
September 12, 2014