Cash no longer king as coins make way for plastic

Britain is moving closer to becoming a ‘cashless society' according to research from Clydesdale and Yorkshire Banks.

Most people (29%) now withdraw less than 10% of their income in cash and are becoming increasingly reliant on card payments, direct debits, standing orders and online transactions.

Almost one in ten people (8%) do not withdraw any of their income in cash and a further 19% of those surveyed withdraw between 11 and 20%.

How much of your income do you withdraw in cash?

UK Average
 
I don't withdraw any of my income in cash 8%
Up to 10% - 29%
11-20% - 19%
21-30% - 11%
31-40% - 4%
41-50% - 9%
More than 50% - 4%

Leading psychologist and behavioural expert, Dr Jane McCartney, said: "For many years psychologists have known about what is called the ‘Pain of Payment', by which consumers are less likely to impulse buy and consider their purchases when using cash as opposed to plastic for payments.

"The behavioural attitude of ‘it doesn't really count, if it's on the card' has been shown to be a strong decoy away from the actual reality of purchasing and spending. For some the emotional pain of parting with your well earned cash can control and curb impulse spending significantly." 

The research also highlighted that people are becoming increasingly comfortable in using their debit card to pay for small amounts, with three quarters (75%) of those surveyed stating they would happily use a debit card for a purchase of under £5.

While only 3% would use a debit card for a purchase of £1, almost one in five (18%) would pay for a purchase between £1.01 and £2 using their card.

What is the minimum amount you would pay by card?

UK Average

Up to £1 - 3%
£1.01-£2 - 18%
£2.01-£3 - 10%
£3.01-£4 - 7%
£4.01-£5 - 37%
Over £5 - 25%

Dr Jane, continued: "One of the potential difficulties of just using plastic for payments is that consumers never really get to know what it is like not to be able to properly afford things. Whereas when cash was the only means of payment, generally if you didn't have the full amount, you didn't have the goods.

"Research shows those who pay with plastic will tend to focus on the benefits of a purchase, whereas those who pay with cash have a tendency to think about the cost more."

When it comes to having cash in your wallet, almost a third of Brits (30%) usually carry less than £10 with just 5% carrying more than £50.

Men tend to carry more cash than women - with 34% of men saying they carry more than £30, compared to just 21% of women and a further 7% of men revealing they carry more than £50 compared to just 3% of women.

Steve Reid, Retail Director at Clydesdale and Yorkshire Banks, said: "Cash is clearly no longer king when it comes to the UK's spending habits. Ten years ago, most people probably wouldn't have thought about using their cards for a low value purchase, now it is the norm for many people.

"Whether it is due to convenience or a way of keeping track of finances, more people are opting to use payment methods other than cash.

"However it's encouraging to see that people are still focused on their finances with almost a third (30%) checking their bank accounts on a daily basis and the majority (55%) regularly using online resources like price comparison sites and online planners to help them budget."

Further information on Clydesdale and Yorkshire Banks' range of competitive products including current and savings accounts, can be found at cbonline.co.uk or ybonline.co.uk or in any branch.