As more people go cashless, here’s how much money to keep in your wallet

Cold, hard cash could fall by the wayside for many Americans when it comes to routine transactions like paying for groceries or gas. Even so, it’s still important to have some cash in your wallet, experts say.

The trend toward the cashless economy isn’t necessarily new, but it’s gaining momentum, according to a new study from the Pew Research Center.

The impartial facts think tank found that 41% of Americans say none of their purchases are paid for in cash in a typical week. That’s an increase from 29% in 2018 and 24% in 2015.

In contrast, 59% of respondents say they still pay cash for at least a portion of their typical weekly purchases.

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Meanwhile, the number of those who say they use cash for all or almost all of their weekly transactions in a typical week is now 14%, compared to 18% in 2018 and 24% in 2015.

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The findings are based on a broader survey of 6,034 adults conducted in July, looking at people’s experiences with money, shopping and investing.

The survey did not address what other forms of payment people prefer instead of fiat money. However, in a separate report, the Pew Research Center found that payment apps like PayPal, Venmo,zelle and CashApp are gaining traction, especially among adults under 50.

Who is most likely to pay in cash

Certain demographics tend to turn to cash more than others.

Adults aged 50 and over are 71% more likely to say they always have cash on hand, compared to 45% of adults under 50.

More than half of adults under 50 – 54% – are not concerned about carrying cash, as opposed to 28% of consumers aged 50 and over.

Black and Hispanic adults were also more likely to say that all or most of their weekly purchases are paid for in cash, at 26% and 21%, respectively. Only 12% of white respondents said the same.

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“Although we’re seeing a shift of more people giving up cash, there are people who still depend on it,” said Monica Anderson, associate director of internet and technology research at Pew Research Center.

People who tend to use cash also have lower incomes. Those who use cash for all or most of their weekly purchases account for 30% of those with household incomes under $30,000, versus 20% for those with incomes between $30,000 and $49,999 and 6% for households with incomes of $50,000 or more.

It was thought that the Covid-19 pandemic would accelerate the transition to contactless payments as more and more people took precautionary measures.

“These are trends that we were already seeing before the pandemic,” Anderson noted.

Most don’t need more than $50 in their wallet

Still, there are times when only cash will suffice, e.g. B. if a company only accepts cash or you want to tip someone.

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“While it comes down to personal preference, I would say most people probably don’t need to carry more than $50 in cash,” said Ted Rossman, senior industry analyst at Bankrate.com.

“In fact, many could probably get by on $20 or less,” he said.

According to Rossman, cash is good for two things: privacy and anonymity.

Additionally, cash transactions are critical for the estimated 5.4% of unbanked households, he noted.

According to Rossman, most people prefer credit or debit cards as a form of payment. Credit cards in particular offer bonuses, buyer protection and convenience. Because of this, Rossman said he’s a “big fan” of this payment method.

But those benefits only pay off if you’re able to pay the balance in full each month and avoid the high interest rates these cards charge, Rossman said.

Credit card interest rates are rising as the Federal Reserve hikes interest rates to curb record-high inflation.

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