Consumers are making more transactions than ever. Are they using cash, debit cards, or credit cards?

Answer: Credit card, debit card, cash

Questions:

• How do you typically pay for things? Why?
• Summarize changes since 2016 in how people pay for things.
• What is one major difference between debit cards and credit cards?

Here are the ready-to-use slides for this Question of the Day for your classroom.

Behind the numbers (The Federal Reserve)

"Every time consumers check out and pay, they are confronted with a decision: which payment instrument to use? Changes in the following factors over time affect how consumers pay and the likelihood that a consumer will pay with cash. The four factors that affect consumer payment choice are:

1. Location. Was the payment made in person or remotely? Consumers increased their share of remote purchases and remote person-to-person (P2P) payments from 2023 to 2024, decreasing the share of payments where cash could be used.
2. Preference. Which payment instrument does the individual prefer to use? This can be influenced by the type of payment, ease of use and demographic factors. The share of people preferring to use cash for in-person payments decreased from 2023 to 2024.
3. Payee. At what type of retailer was the payment made? The type of retailer or payee influences choice. For example, cash is used more often at grocery stores and fast-food locations. The number of payments at such cash-intensive retailers was unchanged from 2023 to 2024.
4. Value. What was the value of the payment? Cash is most likely to be used for payments of less than $25. The number of small-value cash payments was unchanged between 2023 and 2024. Cards are becoming increasingly popular for these small payments, and five small-value payments per month were made with cash, debit cards and credit cards in 2024."

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Check out the activity PLAY: Payment Decisions to practice choosing a payment method

About the Author

Kathryn Dawson

Kathryn (she/her) is excited to join the NGPF team after 9 years of experience in education as a mentor, tutor, and special education teacher. She is a graduate of Cornell University with a degree in policy analysis and management and has a master's degree in education from Brooklyn College. Kathryn is looking forward to bringing her passion for accessibility and educational justice into curriculum design at NGPF. During her free time, Kathryn loves embarking on cooking projects, walking around her Seattle neighborhood with her dog, or lounging in a hammock with a book.