Fewer Americans are carrying cash in their wallets these days, but when it comes to small purchases, people are still more likely to whip out a $5 bill than a credit card.

Cash is by far the preferred payment method when it comes to minor transactions. Overall about 65 percent of people said they usually use cash to pay for purchases smaller than $5, according to a survey released Wednesday by CreditCards.com, a card comparison Web site. Twenty-two percent said they like to use debit cards and 11 percent said they prefer using credit cards for small transactions.

This is the first time CreditCards.com asked about the preferred pay methods on minor purchases but the report showed that cash ruled across all age groups. Still, younger generations are much more comfortable with using plastic than their older counterparts.

“It certainly seems like the stigma of using a credit card for a $2 purchase is gone, whether it’s from the merchant or the people waiting behind you,” says Matt Schulz, senior industry analyst for CreditCards.com, which polled 983 major credit cardholders in late July.

Eight of 10 people age 65 and up said they would normally use cash for small purchases. That was also the only age group where people were evenly split on using debit cards versus credit cards.

After cash, people in most other age groups said debit cards were the next best payment method for small transactions, followed by credit cards. Even the youngest consumers, those ages 18 to 29, were more than twice as likely to use debit cards over credit cards.

Consumers may be opting for debit cards because they’re concerned about piling on to their debt loads, Schulz says. And with good reason: People who carry balances on their cards may face steep interest charges, which can make even small purchases more expensive, Schulz says.

However, credit cards may be a better option for people concerned about fraud, he adds. While banks are generally willing to refund consumers for purchases made with stolen debit cards, some people may find themselves with fewer funds in their checking accounts while those cases are being investigated.

The survey didn’t ask about larger purchases, but reports show that consumers increasingly prefer to pay with plastic over cash. A study released earlier this year by Bankrate.com found that close to 50 percent of Americans carry $20 or less in their wallets each day, including nine percent who don’t carry cash at all. And payment data from the Federal Reserve shows that use of debit cards grew by more than any other type of noncash payment between 2009 and 2012.

Of course, many merchants don’t allow consumers to use credit or debit cards for purchases smaller than $5. And some people may find it easier to pay for such small transactions with the little cash they might carry in their wallets.

Readers, when do you prefer to use cash? Do you find it easy to make small purchases with plastic?


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