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A Generational Divide: Millennials Prefer Plastic, Boomers Cash for Small Buys
Thursday, August 28, 2014 6:25 AM

A cup of coffee. A pack of chewing gum. A newspaper at the airport. For even the smallest, most casual purchase, credit cards and debit cards are replacing cash as the preferred form of payment, according to a new survey by CreditCards.com.

The national telephone survey of 983 adult U.S. credit card holders found that one in three usually uses a credit card or a debit card for in-person purchases of less than $5. The breakdown: 11 percent prefer credit cards, 22 percent debit cards, 65 percent cash.

But the generational divide is striking. A slight majority (51 percent) of consumers 18-29 prefer plastic to cash, the only age group to do so. A preference for cash becomes stronger in each advancing age bracket, until at age 65-plus, 82 percent prefer cash.

The CreditCards.com survey, conducted by land line and cellphone, found that:

  • The casual use of plastic is moving steadily through age brackets -- and already has a firm grip not only on millennials but also increasingly on Gen Xers. Crunched another way, the data show that if you're 49 or younger, you're almost as likely to pay for a $5 purchase with plastic as you are to pay with cash -- 52 percent prefer cash, 46 percent prefer debit or credit cards. For now, if you're 50 or older, you're still somewhat unlikely to pay for a $5 purchase with plastic -- 77 percent still prefer cash, with 21 percent reaching for debit cards or credit cards.
     
  • Those who graduated from or attended college are significantly more comfortable than others with using plastic for small purchases. A combined 39 percent of those with college degrees prefer debit cards (21 percent) or credit cards (18 percent) over cash (59 percent). Only 16 percent of those who have not attended college usually use debit cards for purchases of less than $5, along with only 6 percent who prefer credit cards for that purpose.
     
  • Income doesn't seem to be much of a differentiator, except for those near the bottom of the scale. A combined 38 percent of those making $75,000 or more preferred plastic for small purchases, compared with 43 percent of those making $50,000 to $74,900, 32 percent of those earning $30,000 to $49,900, and only 23 percent of those making less than $30,000.
     
  • Credit cards and debit cards are used more frequently for small purchases by those employed full time (42 percent) or part time (34 percent) than for the unemployed (23 percent). People with children are more likely to use the cards for small purchases (41 percent) than those without children (30 percent), perhaps because parents have less time to wait around for change.