‘Death of the banknote’ as cards steal king cash’s crown

Research from Clydesdale Bank has found 29 per cent of people now withdraw less than 10 per cent of their wages in cash and are becoming increasingly reliant on card payments, direct debits, standing orders and online transactions.

Almost one in ten do not withdraw any of their income in cash.

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

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

The survey makes clear that society is rapidly approaching the time when all payments will be done using cards or banking apps on mobile phones.

However, it has been discovered that “reckless” spending in society has increased the further people move away from handling cash. According to new research, people often do not consider making purchases on credit cards or bank cards as spending money.

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 consider their purchases when using cash, as opposed to plastic for payments.

“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, 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.”

The report also found that when it comes to having cash in your wallet, almost a third of Britons (30 per cent) usually carry less than £10 with just 5 per cent carrying more than £50.

Men tend to carry more cash than women – with 34 per cent of men saying they carry more than £30, compared to just 21 per cent of women.

Steve Reid, retail director at Clydesdale Bank, said: “Cash is no longer king. 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.

“However, it’s encouraging to see people are still focused on finances with almost a third checking their accounts daily and the majority [55 per cent] regularly using online resources like price-comparison sites.”