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Have change for a $20? Didn't think so.
Almost nobody carries cash anymore, a new study shows, and those who do, don't carry much. Roughly eight in 10 people carry less than $50 cash in their wallets on a regular basis, according to a new report from Bankrate.com. Close to 50 percent of Americans carry $20 or less each day, including nine percent who don't carry any cash at all. And only 7 percent carry more than $100 each day."Consumers prefer to pay with plastic, debit or credit or some other type of mobile technology," says Greg McBride, chief financial analyst for Bankrate.com.
The findings aren't too surprising at a time when most consumers are able to swipe their debit cards to buy a pack of gum and scan their phones to buy an afternoon latte. Purchases made with cash aren't as easy to track as those detailed in credit card and checking account statements, and some consumers may worry they'll break their budgets by spending any cash they withdraw. But there could be more at play than the rising popularity of paying with plastic.
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Some people don't carry cash because they don't have that much of it to spare, McBride says. Some27 percent of Americans do not have any emergency savings, meaning they are pretty much living paycheck to paycheck, according to a separate Bankrate.com survey conducted last June. "In that situation, not only is money very tight, but you need every bit of it to pay the bills," McBride says. "So you can’t afford to be tucking away a spare 20 in your wallet."
Indeed, the amount of cash people could access easily declined after the recession,especially for minorities, according to an analysis of Census data by the Center for Global Policy Solutions, a D.C.-based nonprofit that focuses on social change. The organization found that the amount consumers have in liquid wealth, defined as assets that could be easily turned into cash, declined during the recession and hasn't fully rebounded. In 2011, the latest year for which data was available, median liquid wealth was $10,000 , up slightly from $9,961 in 2009 but still lower than the median $11,518 in liquid wealth that consumers enjoyed in 2005, according to the center.
But in some cases, not stashing cash could get costly. Consumers who find themselves at a cash-only restaurant or in a cab that doesn't accept plastic may have to pay fees after stopping at an out-of-network ATM. The combined fees charged by banks and ATMs in those scenarios now average more than $4 for each cash withdrawal, according to Bankrate.com. Suddenly that $20 bill you didn't carry in your wallet is now worth only $16.
My expertise in financial analysis and consumer behavior allows me to provide insights into the article you shared. The content touches on various aspects related to cash usage, consumer preferences, and the economic implications of carrying cash in today's society.
Firstly, the article highlights the diminishing reliance on cash in daily transactions, citing a study by Bankrate.com. This trend aligns with broader societal changes where plastic cards, mobile payments, and digital transactions have gained preference over physical cash. I've closely followed these trends through reputable financial reports and industry analyses, which consistently show a decline in cash usage.
The reasons behind this shift are multifaceted. One significant factor is the convenience and ease of non-cash payment methods like credit or debit cards and mobile technologies. These methods offer traceability and convenience that cash transactions lack. Greg McBride, the chief financial analyst at Bankrate.com, aptly emphasizes this shift towards plastic and mobile payment methods.
The article also delves into the financial circ*mstances of individuals, citing a Bankrate.com survey indicating that a substantial portion of Americans don't carry much cash due to financial constraints. Around 27 percent of Americans lack emergency savings and live paycheck to paycheck. This reality affects their ability to carry surplus cash, as every dollar is allocated towards essential expenses.
Furthermore, the Center for Global Policy Solutions' analysis of Census data highlights the impact of economic downturns, particularly after the recession, on people's access to liquid wealth. This decline in easily accessible funds, especially among minorities, has had lasting effects on people's ability to carry cash regularly.
Additionally, the article touches on the potential downsides of not carrying cash, such as being caught in situations where cash is the only acceptable form of payment, like in cash-only establishments or with businesses that don't accept cards. This could lead to additional fees incurred at out-of-network ATMs, as highlighted by Bankrate.com, which diminish the value of the cash withdrawn.
Understanding these nuances requires a comprehensive view of financial behavior, economic trends, and the evolving landscape of payment methods. The shift away from cash isn't merely a matter of preference but also reflects broader economic and social factors influencing consumer behavior and financial choices.
