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Physical cash may not be the default payment method for most Americans, but the generational divide over whether to use it reveals fundamental differences in how we manage money in 2025.
According to a recent Cash App survey of more than 2,000 U.S. adults (1), nearly a third of Gen Z respondents consider people who pay with cash to be "out of touch" or even "cringe." But baby boomers and those in Gen X believe there are legitimate benefits to carrying cash in your wallet.
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Cash versus charge
The survey revealed a stark split in how different age groups perceive spending.
Nearly 55% of Gen Z respondents said they’re "more likely to spend without thinking” when using cash compared to cards, with a similar percentage of millennial respondents feeling the same way.
However, only 33% of Gen X and just 21% of baby boomers felt this way, showing older Americans experience the opposite effect when it comes to cash.
"We are starting to see these generational divides around how people perceive cash," Lindsay Bryan-Podvin, a financial therapist for Cash App, told CNBC (2). "Older generations view cash as more real, more tangible," while the Gen Z and millennial groups are "not necessarily experiencing that same realness around cash."
This perception gap likely stems from exposure. In the past, people learned about money management through physical currency, creating a psychological barrier that tapping a card doesn’t replicate. But younger adults grew up checking account balances on their phones, while making digital money feel at least as real as cash, if not more.
Read more: Robert Kiyosaki says this 1 asset will surge 400% in a year — and he begs investors not to miss its ‘explosion’
Start investing your spare change
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How does payment method factor into debt and savings?
While data from the Federal Reserve confirms lower-income consumers rely more on cash, along with adults 55 and older (3), using cash over debit doesn’t have any correlation to debt or savings.
Those earning less may use cash more than cards because they simply lack access to credit or are being financially cautious, not because cash inherently prevents debt. Similarly, those who regularly use credit cards may carry debt due to economic circumstances rather than their payment method of choice.
That said, the data points heavily toward credit card users carrying a large amount of the country’s household debt.
Credit card debt
According to WalletHub, America’s total credit card debt reached $1.32 trillion this year (4), while CoinLaw notes that 53% of U.S. adults have carried credit card debt at some point in 2025 (5). Yahoo Finance also notes that 60% of cardholders carried balances each month rather than paying in full (6).
However, income plays a role. Among those earning less than $25,000 annually, 56% of cardholders carry balances, compared to 37% of cardholders who bring in at least $100,000 per year, according to Helcim.com (7).
The numbers are even more telling when you look at individual balances: last year, average U.S. credit card debt per consumer was over $6,700, Experian found — up 3.5% from 2023 (8).
Savings
When it comes to savings, the picture becomes cloudier, as there’s limited data comparing savings rates to payment preferences. But behavioral patterns can offer clues.
Research from West Virginia University found that consumers regularly paying credit card balances in full tend to be the same people who save consistently, while those who carry high-interest debt are less likely to save even when interest rates are attractive (9).
And, interestingly, Americans have recently shifted toward "revenge saving" after years of post-pandemic spending, Finistack.com reports (10). The national personal savings rate climbed from 4.1% in January to 4.9% in April 2025, with 77% of Americans changing their financial habits and half keeping more cash on hand for emergencies.
Is cash still relevant?
Despite its declining popularity, cash maintains relevance in today’s economic environment.
According to the Federal Reserve, cash accounted for 14% of all consumer payments in 2024, with nearly 80% of U.S. consumers holding cash for at least one day of the month during each year since 2018 (3).
In fact, physical bills can still offer advantages: for example, cash transactions can’t be hacked, which provides safety and privacy with your spending. For budgeting, the "envelope method" creates a tangible spending limit that some find easier to follow than monitoring digital account balances.
However, both payment methods also carry distinct vulnerabilities.
The risks of using cash and cards
The risks associated with cash are primarily physical. For example, cash offers zero fraud protection, which means if someone steals your wallet, that money is simply gone. Cash can also get ruined over time if it’s not stored correctly due to physical and environmental factors.
Cards, on the other hand, carry different risks. Cases of credit-card related fraud increased 2.85 times from 2014 to 2024, WalletHub reports, based on Consumer Sentinel Network’s annual reports (4). However, fraud detection powered by artificial intelligence has helped reduce credit card fraud by 44% in 2025, according to CoinLaw (5).
But the biggest risk affiliated with cards is the temptation to overspend, something that’s particularly problematic since the average credit card interest rate reached 24.37% in 2025, according to Ramp.com (11).
The lost opportunity cost
One significant disadvantage with cash is the lost earnings from interest. Bryan-Podvin emphasizes that cash sitting in your wallet earns nothing, while high-yield savings accounts offer competitive interest rates that will allow your money to grow.
Cash holders also lose Federal Deposit Insurance Corporation protection and the ability to lock stolen cards.
"It’s fine to do a little bit of money in cash, but I would recommend making sure that you have it protected," Bryan-Podvin advised.
Neither option is inherently superior to the other. Both are tools, and their effectiveness depends on how you use them. The generations may disagree on which feels more "real," but your bank account balance tells the only story that truly matters.
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Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Cash App (1); CNBC (2); Federal Reserve Bank Services (3); WalletHub (4); CoinLaw (5); Yahoo Finance (6); Helcim (7); Experian (8); West Virginia University (9); Finistack (10); Ramp.com (11)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.