Retiring My Money Clip
By: Hector Barajas
Reading this article will be tough for my dad.
My father, a member of the baby boomer generation, can’t seem to understand how anyone uses their credit card to pay for a $5 cup of coffee or $1.75 for a muffin. “Look at them! Paying with a card, don’t they have at least $2 in their pocket?”
For my dad, everyone should carry at least $40 in their purse or wallet. Credit card use should be reserved for those purchases over $40.
While the majority of consumers still use cash for purchases under $5 (except when my dad is around) the trend has been declining steadily over the past three years.
CreditCards.com found that, “cash and debit cards still dominate for small purchases, but 17% of the respondents in the survey said that credit cards were their primary method of paying for purchases under $5. A year ago, only 11% said that.”
The electronic over cash trend is being driven by millennials (21%), followed by Generation X (16%) and baby boomers (12%).
Not just credit cards that are challenging cash. There are also mobile payments.
eMarketer reports that mobile payments would continue to rise to $62.49 billion in 2017, up from $27.67 billion in 2016. By 2020, an estimated 33.1% of smartphone users are projected to be making mobile payments.
Visa USA and PYMNTS.com found that 64% of smartphone users said they prefer to use credit cards or mobile payments to cash. Their top reasons were that electronic transactions are faster and more convenient (34%). Another 19% found it safer not to carry cash in their wallet.
Cash is not dead, but it is growing weaker. We are beginning to see a growing trend toward alternative forms of payment. A majority of consumers prefer to use credit or debit cards for convenience, often for their rewards programs. Every $10 here or $5 there adds up over a year.
I remind my father, who retired a few years ago, that I used my rewards money to buy his L.A. Dodgers jacket he so proudly wears. Giving me “the look,” he replies by asking me if I have enough cash in my wallet in case of an emergency.