Card payments have surpassed cash usage in just a few years. This year, cash was the third most frequently used payment method, following credit and debit cards, as reported by The Federal Reserve Financial Service's 2025 Diary of Consumer Payment Choice.
TL;DR
- Gen Z views cash as outdated, with over half using it only as a last resort.
- Many Gen Zers consider cash users "out of touch" or "cringe," preferring digital payments.
- Buy-now, pay-later services are also popular with Gen Z as an alternative to cash.
- Experts warn BNPL services can lead to debt if payment schedules are not managed.
And Gen Zers are leading the charge in ditching paper for plastic. Results from a Cash App/Harris Poll survey released Thursday shows more than half of Gen Z only uses cash as a “last resort” when paying, and almost a third said people who pay with cash are either “out of touch” or “cringe.” The Harris Poll surveyed more than 2,000 U.S. Adults for Cash App from Sept. 25-29.
A 2024 Gen Z Reddit forum indicates that some members of Gen Z are so opposed to using cash that they will refuse to shop at businesses that only accept it.
“I do not carry my wallet with me anymore and carry my ID in my phone case. I use Apple Pay for everything,” one user wrote. “The few times I have even stood at an ATM in the past few months I have been harassed by people begging for me to withdraw cash for them, so I don’t like the hassle of withdrawing money anymore.”
Younger consumers generally feel there's no benefit to using cash and find obtaining it to be a time-consuming hassle.
“Why would I go to an ATM, take out cash, use that to pay, and make a note myself of what I used that cash for when I could just swipe a card?” One LinkedIn user asked while commenting on coverage of the Cash App report.
Of the 48 payments per month U.S. Consumers make on average, just seven are cash, according to the Federal Reserve Financial Service study. That suggests “cash usage may have reached a baseline,” Kathleen Young, executive vice president and chief of FedCash Services, said in a statement. To be sure, cash still “maintains relevance due to [its] ubiquity, accessibility and resilience,” she added.
Gen Z spending habits
Not only have debit and credit card payments become more popular with Gen Z, but so have buy-now, pay-later (BNPL) services. Yet another alternative to cash, these services like Klarna, Affirm, and PayPal’s “Pay in 4” act somewhat like credit, allowing users to pay for purchases in installments, typically with a no or low down payment. They’re especially appealing to consumers who have a poor credit history, or none at all, because these companies typically only perform a soft credit check in order to approve payment installments.
Sabrina Rozza, 25, had previously informed Preston Fore of Coins2Day’ s that she utilized Afterpay for a $4,000 trip to the Dominican Republic, describing it as a “great alternative” to a credit card because it allowed her to make an initial payment and then settle the remaining balance over a six-month period.
“It definitely helped with the budgeting. And in full transparency, at the time, I wasn’t making enough money to just pay it off on a credit card,” she said. “So it just gave me more of, like, more leniency to afford a vacation that I really wanted to go on.”
A recent J.D. Power study highlights the significant appeal of BNPL among younger demographics: approximately 42% of Millennials and Gen Z utilized BNPL, compared to just 21% of consumers from other age groups. However, experts caution that these services carry an inherent risk, as consumers might accumulate so many payment installments that they face financial ruin or debt, similar to how credit card debt can snowball.
“We’re hearing story after story of people overextending themselves, juggling payments from various loan companies and banks,” Rebecca A. Carter, a LegalShield provider lawyer with Friedman, Framme & Thrush, said in a statement. “What many don’t realize is that if you aren’t disciplined about managing the payment schedules and budgeting, it can snowball quickly into a serious financial burden.”