Millennials: Driving Force for Cash, Pumping the Brakes on Credit Debt



Despite occasional cashless experiments and prophecies of a cashless society, the resilience of cash as a preferred payment method remains persuasively strong. And it should persist in the coming years for one primary reason: millennials. 

What is it about millennials that promises a future for cash?

  • This largest demographic group prefers cash above all payment methods, exceeding debit and credit cards, digital and checks, our 2017 Health of Cash Study reveals.  
  • Millennials are decreasing their use of credit, with just 17 percent saying credit cards are their preferred payment method vs. 29 percent who prefer cash.  A Federal Reserve Board Study that asked people to keep a diary of their spending also found that compared with their elders, millennials have an aversion to credit.  They have lower adoption rates of credit cards than other cohorts and they use cash more.
  • Contrary to common perceptions, these 19-39 year olds aren't spendthrifts but are holding cash in liquid checking and savings accounts instead of investing it, a recent Black Rock Global Investor Pulse report found.  And a recent Bankrate study found that 62 percent of millennials are saving more than five percent of their income, while only half of older adults are saving at the same rate.  
  • Millennials are increasingly risk averse, with 85 percent considering themselves "conservative" in their risk tolerance, higher than that of Baby Boomers, according to Legg Mason's Global Investment Survey.  

A few factors explain why millennials are avoiding credit, and also why approximately half of this influential demographic group admit to paying more with cash today than a few years ago, as found in our 2017 Health of Cash study. For one thing, many are paying off student loans, which helps explain why they’re less willing to take on credit card debt. They’re simply cautious. Another Bankrate study, for instance, indicates they spend less on travel and home internet and entertainment services, such as cable or satellite television, than other adult generations.

Also, to a degree, millennials’ aversion to credit likely reflects that they grew up in tight times during the Great Recession a decade ago and saving cash has become a learned behavior.

Millennials’ preference for cash surfaces in other ways. Our 2017 Health of Cash Study found that more than two-thirds (68 percent) get upset when establishments don’t accept cash, and 70 percent say they’re likely to have cash with them when they go out on weekends. 

To be sure, millennials – considered the most digitally inclined generation – show a growing interest in digital payment methods, such as person-to-person payment smartphone apps. They are more likely to have used both non-bank P2P apps and bank P2P services than other generations. But they’re also more likely to have used cash to pay another person.

So, while for decades to come millennials will be a driving force in the popularity of different methods in the payments landscape, they also are expected to help keep cash resilient and relevant in the digital age.

Tom Pierce
Chief Marketing Officer

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