Shoppers are using their credit cards more frequently on small purchases that they typically handled with cash in the past.
A survey by CreditCards.com found that 17% of credit card holders said they most frequently use a credit card when buying items under $5 in a store, up from 11% last year.
The increase came at the expense of debit cards (24%) and cash (55%), both of which saw a three percentage point drop in the last 12 months, according to the report released Monday by the Austin, Texas company that allows consumers to compare credit card deals online.
Age, income and education were helpful predictors:
Millennials: 53% of those ages 18 to 36 said they preferred to make small purchases with a debit or credit card. Plastic was also the most common choice among college graduates and those making $75,000 or more per year.
Gen Xers: Members of this generation have an affinity for debit cards, using them more often than older buyers, who prefer credit cards (when not paying cash).
Boomers and seniors: Cash is still cool among the old school shoppers. When they come to a register with stuff costing $5 or less, 70% use cash. Cash is also used more commonly by those with lower incomes and high school educations or less.
The survey added a question about big, single purchases of $500 or more (excluding a house or a car). Among the 99% of card holders who responded:
- Fifty-seven percent most often used credit cards;
- Twenty-four percent most often used debit cards;
- Ten percent most often pay with cash; and
- Eight percent most often write a check.
Income and education played a major role in credit card use for big purchases.
Among those earning $50,000 or more per year, 62% said credit cards were their most frequent payment method, while only 42% of those making less than $50,000 said credit cards were their most common choice.
Likewise, 71% of college graduates rely primarily on credit cards for big purchases, compared with 45% of those without a college degree.
