When most of us consider the various payment options available to us, we rarely consider what each is costing us, but a new study from Tufts finds that there’s a significant cost to the time-honored tradition of using cash – $200 billion annually, to be exact.
According to Yahoo! Finance, which reported on the study from Tufts, the costs associated with using cash as opposed to electronic forms of payment add up to an estimated $200 billion per year. While this total applies to both consumers and merchants, the study also drilled down to what cash costs the average family. That total? A whopping $1,739.
Most of these costs are associated with families pulling cash from ATMs they don’t bank with and accessing paycheck funds that have been loaded on a payroll card. The study also found that, because using cash is more prevalent among low-income Americans who don’t have access to direct deposit or debit or credit cards, costs related to using cash were substantially higher for this demographic subgroup.
Interestingly, the study also revealed other demographic differences in the ways Americans handle cash. For example, men are twice as likely as women to pay for items in cash, and those under 35 carry half as much cash as those 55 and older.
It should be noted that the study authors don’t advocate that cash be eliminated because of the costs associated with it; not only is this unrealistic, but it would limit the choices many of us have become accustomed to. The main point they hoped would be extrapolated from the research is that low-income Americans need to have access to free and inexpensive options for accessing their money, and that policy changes might be necessary to accomplish this.