33% of People Use Credit Cards for Purchases Under $5 Dollars

In the last year or so, financial institutions and credit card companies have released new credit cards that maintain a “tap” feature. It is being promoted as an option for those who wish to pay for small $1 or $2 coffee or doughnut purchases. For most, the thought of using credit cards for something less than $5 is foolish, but for a growing number of adults this is the preferable choice.

Whether it’s for a cup of coffee, a can of coke or shampoo, credit cards and debit cards are slowly replacing cash as a method of payment. According to a new survey, about one-third of Americans regularly uses a credit or debit card for in-person purchases that are less than $5.

Here are the specifics: 65 percent cash, 22 percent debit cards and 11 percent credit cards.


The most compelling finding, says the study authors, is the generational viewpoint. The national survey discovered that a majority (51 percent) of millennial consumers choose plastic over cash, and this trend increases with each age bracket until it reaches 65-plus, which overwhelmingly chose cash with 85 percent.

Experts aver that there are many advantages to using plastic over paper these days, such as reward points for constant card usage, online record keeping instead of paper records and widespread adoption since banks have continually encouraged consumers and merchants alike for decades to implement credit and debit machines.

“I think those people mostly use cash because that’s the way we’ve always done it,” said Matt Schulz, senior industry analyst for CreditCards.com, in an interview with USA Today. “But Millennials have grown up doing things like going to school and using a prepaid card to pay for lunch. For a lot of younger folks, cash is just something that they don’t carry around.”

Furthermore, Schulz presents the case that those who prefer to use debit over credit may be missing out on the abundance of benefits, particularly when it comes to security and the newsworthy data breaches.

“I don’t know that they’re fully aware of the risk,” Schulz added. “In this time of worry about data breaches, if your debit card information gets stolen, you are at risk of losing real money, money you might need to make a car payment or pay the rent.”

The survey also found that college graduates feel more comfortable using plastic for small purchases, while income levels have no impact on a person’s decision to buy their $2 coffee with a debit or credit card. The same number of Republicans and Democrats favor using plastic or cash for their small buys.

We reported last week of a software CEO who opined that consumers are not being driven back to cash despite the large number of cyberattacks that infiltrated retailers and banks’ systems. Douglas Ceto, CEO and President of CetoLogic, a provider of software and analytics solutions, argued identity theft and security failures could be something that should urge consumers to start using cash again.

The survey was conducted by the Princeton Survey Research Associates International with 1,497 adults between Jul. 24 and 27. It contains a margin of error of +/- 3.7 percentage points.