Survey: Cash More Popular Than Credit, Debit Card Use

Americans cut back on their use of credit cards and relied more on cash for routine purchases and bill payments in 2009, according to a recent study by the Federal Reserve Bank of Boston's Consumer Payments Research Center (CPRC).

In addition to the weak economy, new government policies and banking business practices, along with an environment of low interest rates, may also have influenced consumer payment preferences during that time period, according to a statement.

The average consumer made 64.5 payments per month in 2009, down slightly from the 67.4 monthly payments reported in the 2008 survey. Debit cards were still the most commonly used at 19 payments per month, with cash second at 18.4.

In 2008, consumers reported 21.2 debit card transactions per month and 14.5 cash transactions. The average consumer also kept more cash on hand in 2009: $291 per person compared with $230 in the 2008 survey.

"It appears that the business cycle and payments-related public policies had a notable impact on the composition of consumer payment use in 2009," said Scott Schuh, CPRC director. "For many years, consumers had been migrating away from paper instruments toward cards and electronics."

Schuh added: "In 2009, consumers reversed that trend and moved back to more reliance on cash. The findings raise the important question of whether this move signals a permanent reversal or a transitory response to the severe recession."

The results from the 2010 survey are expected later this year.