Millennials are considered the digital generation. So you would think that they would be the fastest adopters of technology like Apple Pay. But it turns out that when millennials shop in physical stores, they like to use cold hard cash.
The“Diary of Consumer Payment Choice,-.” published by the Federal Reserve reports that millennials have a higher propensity to use cash than do Gen Xers or Baby Boomers.
There are five main reasons why millennials love cash:
- First, they are just establishing themselves in life and have less access to credit cards. There was a time when credit card companies flooded college campuses with offers because it was a good bet that if and when students ran into too much debt, their parents and financial aid would bail them out. Federal regulators banned this practice and since then, it seems younger people have a harder time getting approved for credit.
- Second, they have less income than older generations. The Fed study states that overall, people who make less than $25,000 are more likely to use cash for transactions than are people who make more than $75,000.
- Third, millennials make a lot of smaller value purchases such as coffee and fast food. Some merchants charge a fee to use plastic if the purchase is below a certain amount.
- Fourth, even though Peer-to-Peer payment apps and digital wallets like Venmo are in the news, millennials still prefer to settle accounts and give gifts to people they know in cash. 75 percent of transactions between individuals are conducted with cash. It is often easier to hand someone a ten dollar bill than it is to send them that amount digitally. And security breaches give us all pause about how much data and bank account information access to bank should be shared.
- Fifth, debt-conscious millennials are more likely than older generations to start out with big student loan and car loan obligations, so they like to use cash to avoid adding to their debt load.
Millennial Cash Usage
It is interesting to note that 52 percent of cash transactions are for food and personal care items. Millennials are less likely to spend cash at the grocery store than they are at Starbucks.
Millennials are also less likely to have multiple rewards credit cards. Half have only one card whereas 40 percent of seniors have three or more cards. They use the cards they have less too. Fewer than 50 percent of millennials use their cards at least once a week, while 61 percent of Seniors whip out a credit card in that period.
Preferring cash is a global phenomenon for millennials. A Swedish study showed 56 percent of this age group would oppose transitioning to a cashless society.
Millennials who embrace the trend to pay with cash should check out the Withdraw Cash Wednesday initiative. This program encourages people to withdraw cash from ATMs on Wednesdays and do all their weekly spending with cash to control spending.
Cash is king for the millennial generation. It is the universal and egalitarian form of payment that is accepted everywhere.