Cash Vs. Credit Vs. Debit: Which Do You Use For Small Purchases?

Creditcards.com did an interesting poll this year to see how different age groups are paying for purchases under $5. It looks like cash is king when people are making smaller valued transactions. While I prefer using credit cards for all possible purchases to earn rewards, most consumers don’t feel the same way.

Though I’m not entirely sure it’s everyone’s main reason for doing so, using cash helps to minimize chances of identity theft, especially with all the data breaches this year.

There are two important points I’d like to bring up about the above study.

One is that the 65+ age group is most likely to choose cash over using credit cards. It appears as though they’re not as concerned with building their credit and earning rewards, which isn’t too surprising.

The issue that stands out the most from the study is the fact that the 18-29 age group depends much more on debit cards over credit cards. One likely reason is that this typical demographic prefers a more secure way of limiting spending.

I’m all for responsible spending, but everyone should realize that debit cards typically don’t offer rewards for purchases and provide less protection compared to credit cards. When fraud does happen, cardholders could be liable for unauthorized charges of $500+ with debit cards, versus the usual max of $50 with credit cards. Again, debit cards also don’t help to improve credit, which I would say is definitely important for this age group.

If you’re in the 18-29 age group, consider opting for your credit card over your debit for all transactions involving a swipe. 🙂