Fed Payments Diary: Cash Use Dips, But Remains Resilient

Credit and debit card use is up, but cash remains in 76% of consumer wallets, finds the 2026 Diary of Consumer Payment Choice, released by Federal Reserve Financial Services.

Now in its 10^th year, the report found that, on average, a consumer made six monthly cash payments in 2025, down 57.1% since the 2016 tally of 14 times. Indeed, 81% of consumers used cash in the prior 30 days to make a payment, down from a recent peak of 87% in 2023.

What’s taken up the slack? Credit and debit card payments. In 2016, the first year for the payments diary, a consumer made on average 12 debit card transactions and eight credit card transactions a month. In 2025, they made 15 debit and 16 credit card payments. Overall, consumers made an average of 47 monthly payments in 2025, not far off the 45 they made in 2016.

“Despite a small decline from last year, the consistent use of cash year-over-year shows there are certain transactions where people want or need to use cash. This is likely due to several unique characteristics of cash payments that other payment options have yet to fully replicate, such as anonymity, widespread acceptance, instant settlement and reliability as a secondary payment instrument. Collectively, these small changes indicate that consumers’ overall payments behavior has not changed much since 2024. Consumers continue to balance preferences, needs and financial considerations when making payments,” the report says.

Tellingly, a huge portion—92%—of consumers have no plans to stop using cash. Only 5% say they have dropped cash, a figure that is unchanged since 2023.

“While it was the payment method used most often a decade ago, today most people view it as a backup option,” says Shaun O’Brien, FRFS lead data and policy analyst and co-author of the Diary’s findings. “But here’s why it’s still relevant: cash simply works when nothing else does—no internet required, no power needed. People keep it on hand for different reasons. Some genuinely prefer it, others want a safety net for situations where cards aren’t accepted, like school fundraisers or the local farmers market. And some people simply prefer using cash for small purchases like their morning coffee. At the end of the day, cash remains a reliable, trusted payment method that people know they can count on.”

Consumers used cash for small-value transactions, of less than $25, an average of five times a month in 2025, a rate that is unchanged since 2021, but down from 11 times in 2016.

A lot of these transactions are made in stores, where overall cash use has been dropping. Cash use for in-person payments has been steadily decreasing since 2016, when 27% of respondents said it was their preferred payment method, compared to 16% in 2025. Credit card payments, in particular, ate into cash use. In 2025, 38% said a credit card was their preferred payment choice, compared with 24% in 2016. Debit has remained fairly steady, at 40% in 2025 and 42% in 2016.

It’s no surprise that cash use remains a common payment option, though who uses it most and where they use it depends on their demographics. The Fed report found that consumers 55 and older made an average of 10 monthly cash payments, compared with five for those between 25 and 54 years old, and two for consumers 18 to 24 years old.

Rural households also made more monthly cash payments, nine, than did their suburban and urban counterparts, at six times each. Lower-income households also used cash more often than higher-income ones.

Cash’s continued popularity is no surprise to Brian Riley, co-head of payments and director of credit and risk advisory at Javelin Strategy & Research. “Cash is still alive and well, but usage is down, particularly for younger, urban, and wealthier users,” he tells Digital Transactions News in an email. “The highest cash users are people over 65, those living in rural areas, and [consumers] with lower incomes.”

Cash in one way may represent security for some consumer segments. “For some, particularly younger age cohorts, urban and suburban residents, and those with higher incomes, carrying cash is a security blanket rather than a transaction tool. The older you get, the further you live from a major city, and the less income you have, the more cash usage increases,” Riley says.

In reviewing the 10 years of data, the Covid 19 pandemic years stand out, O’Brien says. “The pandemic changed how people make payments, but over the last three years, we have seen consumer payments remain largely consistent, even across different payment instruments. This suggests the payment habits consumers have established in recent years may have reached a new equilibrium.”