1 in 3 Americans Can’t Make a $20 Cash Purchase Without Using an ATM

Do you carry cash? Are you carrying cash right now? If you had to make a cash purchase, would you need to make a quick trip to the ATM? If you answered no to the first two questions and yes to the last, you’re hardly alone.

The rise of fintech start-ups, electronic payment apps and online banking — not to mention the ubiquity of credit cards and debit cards — has made it possible for many Americans to go without carrying cash most of the time. And many observers speculate that a cashless society could become a reality sooner rather than later.

In this DepositAccounts survey, we have taken a closer look at how many people are living a cashless lifestyle and explored the reasons people forego carrying cash.

Key findings:

• Approximately 22% of survey respondents said they were not carrying any cash when we spoke to them. Not surprisingly, the younger the respondent, the less likely they are to have cash — 35% of the youngest respondents did not have any cash on them.
• About 1 in 3 respondents wouldn’t be able to make a $20 cash purchase without going to an ATM first. Around 33% of the people we surveyed said they withdraw cash a few times a month, 21% responded they withdraw cash once a week or more, and another 21% get cash once a month. Meanwhile, 11% withdraw cash once every few months, and 14% withdraw cash even less often than that
• Approximately 67% of Americans have been caught in a situation where they regretted not carrying cash, and nearly 6 in 10 have been in an emergency situation where they needed cash but did not have any. Millennials and members of Gen X were most likely to have been in a situation where they regretted not carrying cash. Members of Gen X are also most likely to have been in an emergency situation where they needed cash.
• Nearly 55% said they are frustrated when a business only accepts cash payments. Millennials are generally most likely to feel this frustration.

Here’s why Americans carry cash

According to our survey, the majority of Americans who carry cash do so to be prepared for an emergency. The next most popular response indicated that respondents keep cash on their person in order to pay for small purchases.

Only 25% responded that they actually prefer using cash, while 38% used cash out of necessity, due to cash-only services or a store’s card reader being down.

How much cash do Americans typically carry?

Our survey shows that when people do admit to carrying cash regularly, the amounts they have on them are relatively small: 32% say they carry $1 to $20, while 26% say they carry $21 to $49.

DepositAccounts' founder Ken Tumin says he’s somewhere in the middle. “Even though I use credit cards for most of my purchases, I still carry more than $20,” he says. “I like the idea of having cash as a backup form of payment.”

Interestingly, of those surveyed only 7% said they never made purchases with cash, while 6% said they always made purchases with cash. A little more than half of respondents conceded that they use cash to make purchases sometimes.

Why don’t Americans carry cash?

Most Americans don’t carry cash simply because they prefer paying with card.

“I think many people, especially the younger generation, much prefer the safety and convenience of debit and credit cards versus cash,” says Tumin. Cards offer some protection through security features and the chance for cancellation in case your wallet is lost or stolen, for example. After all, once cash is lost or stolen, it’s gone.

As for convenience, cards are much faster to use at checkout, requiring only a quick tap or swipe nowadays. Indeed, you can see that 33% cited taking out cash as being a hassle as a reason for not wanting to carry cash.

And while Tumin carries both his cards and cash, just in case, he recognizes that many others don’t seem to have the same concern as him. “Perhaps knowing that they can get the cash from an ATM is enough of a backup for some folks,” he says.

Another angle is that credit cards can offer rewards. When asked if they avoid paying with cash because they want to earn credit card rewards, 34% of respondents agreed. Tumin finds that because of these often lucrative rewards, even many older people will use debit cards and credit cards instead of cash for most of their purchases due to the financial advantages.

ATM fees are another barrier to using cash: 1 in 3 respondents said they avoid cash because of the ATM fees associated with withdrawing cash. Millennials are significantly more likely to exhibit this behavior (41%), unlike those aged 73 and over, or the silent generation, who are least likely (17%).

If you tend to fall into the ATM trap, know that one way to get around ATM fees is by staying in-network. Often, this means using only your bank’s ATMs, which you can often locate on your bank’s app. Sometimes, banks provide customers with access to a partner ATM network, like Allpoint, which is often the case with online-only banks.

Can we do away with cash completely?

Cash still continues to be the most frequently used means of payment, according to 2018 data from the San Francisco Fed, accounting for 30% of all transactions of any size. When the San Francisco Fed looked at transactions under $10, cash was used in 55% of transactions.

The San Francisco Fed’s research looked only at the consumer side of the equation, however. A 2017 poll by 451 Research firm for payments solution developer Adyen found that 78% of retail executives were considering cashless stores that would accept only cards and digital payment methods. Certainly, we’ve already begun to see the rise of several restaurant groups, retailers and building management companies make the switch to cashless operations, citing safety, efficiency and convenience.

These developments have generated something of a backlash from consumers and municipal governments. Cashless establishments would exclude around 6.5% of the U.S. population — or 8.4 million U.S. households — who are unbanked, meaning they do not have a bank account, according to the FDIC National Survey of Unbanked and Underbanked Households. To tackle this issue, cities including Philadelphia and San Francisco and states like New Jersey and Massachusetts have passed legislation banning cashless stores, with other cities like New York City are not far behind.

Methodology

DepositAccounts by LendingTree commissioned Qualtrics to conduct an online survey of 1,019 Americans, with the sample base proportioned to represent the general population. The survey was fielded July 8-12, 2019. For the purposes of our survey, generations are defined as follows: Members of Gen Z are currently between the ages of 18 to 21, millennials are currently between the ages of 22 and 37, Gen X is between the ages of 38 to 53, baby boomers are 54 to 72, and members of the silent generation are 73 and older.