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THE COST OF CASH IN THE UNITED STATES
DEMOGRAPHIC TRAITS: The demographic traits of age, income, race, and gender had durable influence on cash holdings, perceptions, and costs.
AGE Americans under 35 have median cash balances roughly half those aged over 55, but pay more in fees than older Americans. Several factors may be at work here. As individuals age, they are likely to earn more and accumulate assets, and therefore they may simply have more money that could be held in cash. Additionally, older Americans prefer using bank tellers for transactions, a practice which typically carries no fee. Consumers using check cashing, ATM cards, and types of cash advances may face higher charges in some locations. Older Americans also access cash far less frequently, perhaps because of the temporal distribution of income, reduced mobility, or long established habits.
INCOME Richer Americans carry more cash in their wallets. Median cash balances for those earning over $60,000 are about the same as those of people earning less than $40,000. Income correlates not only with age, but also with higher levels of education. Furthermore, the rich tend to hold more different types of payment instruments, and to be more aware of the risks of accidental or malicious cash loss. Perceptions of the risks associated with cash are explored in detail below.
RACE Among racial groups, Latinos, Pacific Islanders, and American Indians report much higher average maxima of cash holdings, as compared to white, African American, and especially Asian Americans. African Americans and Pacific Islanders are likely to hold minimum balances nearly double those of other groups.
GENDER Men carry nearly double the amount of cash that women do. Men are slightly more likely to keep some cash always on hand than are women, and they use roughly 50% more cash per month than do women.
FINANCIAL TRAITS: The financial traits investigated included: whether the household has access to formal financial institutions through a bank account, the types and sources of income the household receives, and the way in which the receive income, or payment instrument. They were found to be correlated with who holds higher cash balances and who pays more for cash.
BANKED STATUS The unbanked access greater amounts of cash in a typical month than those with bank accounts. Those with bank accounts are roughly twice as likely to report that it is possible to hold too much cash. The unbanked, meanwhile, report substantially higher ceilings on cash balances if they have them at all, in absolute terms and not adjusted for income.
Š 2013 THE FLETCHER SCHOOL OF LAW AND DIPLOMACY, TUFTS UNIVERSITY