U.S. Markets closed

Credit Cards May Overtake Cash for Small Purchases

Marine Cole

While cash is still king for most of the small purchases we make, millennials in particular are increasing their use of credit cards when they spend less than $5.

About two in three credit card holders use cash for purchases of less than $5, but a clear generational divide in how Americans pay for small purchases means that might not be the case much longer, according to a new report out Wednesday from CreditCards.com.

Related: 5 Reasons to Pay Off Your Credit Card Debt Now

Almost 80 percent of people age 50 and older favor cash for small transactions, while only 52 percent of Americans between 18 and 49 do.

Those between 18 and 29 represent the only age group to prefer plastic to cash, at 51 percent.

“The casual use of plastic is moving steadily through age brackets and already has a firm grip not only on millennials but also increasingly on Gen Xers,” the report says.

Related: Credit Cards at College: Making Smart Choices from Day One

The trend toward using credit and debit cards for small transactions will snowball, experts predict. “I believe plastic will increase for small purchases, both for debit and credit cards,” said Martin Lynch, director of education of the Cambridge Credit Counselling Corp. of Massachusetts.

There are several reasons for the shift:

  • Technological advancements at the point of sale have made it as easy to pay by card as by cash.
  • With rewards now a common feature of credit cards, there’s a strong incentive for consumers to use cards over cash.
  • High ATM fees and the difficulty of finding a no-fee ATM means some consumers are now carrying less cash on them and using credit cards.


There is, however, at least one downside to the trend. As consumers use their credit cards more frequently for small purchases, they also increase their potential risk of identity theft, an increasingly compelling problem today.

Top Reads from The Fiscal Times: