Despite the numerous headlines that seem to indicate cash is dead, there are still a significant number of consumers who rely on cash. This is just one of the findings from the Federal Reserve’s latest Diary of Consumer Payment Choice.

This annual report, which began in 2016, takes a closer look at consumer payment behaviors. Although the recent diary published in May states that some of the findings, like an increase in total payments, cash payments, and in-person payments, are not necessarily statistically significant, they do shed light on consumer behavior and trends, like cash use.

The one percent increase in cash payments to 20 percent is worth noting, especially because it is the first increase in cash payments since 2016. Store-of-value-holdings, which is cash that consumers stash at home or in the car, remained high. This also is evidence that a demand for cash remains. The interesting point is not necessarily the increase in dollar amount of store-of-value holdings, but that the share of consumers holding on-person cash has been consistent for the last few years. The report states: “This consistency suggests that most adults prefer to have some cash on hand – both in normal years and in unusual years.”

The report noted that even consumers who prefer other payment methods still tend to use cash. “Consumers who preferred cards continued to use cash as their second-most-used payment,” the report stated.

Preferred payment method remains unchanged

Another important finding highlighted in this recent diary is one that that also has been pointed out in previous supplemental reports. It is that consumers in lower income households rely primarily on cash. This group of consumers has not altered their payment habits, even during the pandemic. According to the diary, such consistent payment habits suggest that this group of consumers is less willing or able to use other payment options. “On average, consumers in households with lower income have a higher share of cash use than those in higher income households…The relation between household income and cash use predates the pandemic and has persisted through 2021.”

Simply put, this means that approximately 20 percent of the U.S. population is dependent on cash for everyday payments. Rochester continues to witnesses firsthand the demand for cash as the need for its services grow.