Paying with Cash Costs Americans $200 Billion a Year

Herb Weisbaum, Today, October 11, 2013

Electronic payments–by phone, card and computer–continue to gain market share. And yet, millions of Americans choose to use cash.

Some have no alternative; they don’t have a checking account. Some value the privacy they get with cash transactions or the psychological sense of security knowing that cash is always accepted. For some families, cash is cheaper than using credit and helps them control spending.

But there is a cost to using cash–in both time and money–that’s not always taken into account. Those costs include fees to use a check-cashing service, withdraw from a non-network ATM fee or access wages loaded onto a payroll card.

A new study by Tufts UniversityThe Cost of Cash in the United Statesputs that price tag at about $200 billion a year. This figure includes $55 billion in higher costs to businesses, $43 billion for U.S. households and $101 billion in missed tax revenue because of off-the books transactions. For the average American family, the cost of cash is about $1,739 a year. The authors characterize their estimates as conservative.


The report, based on a survey of 1,000 Americans, found that:

The cost of cash is higher for poorer and unbanked Americans

Someone without a bank account pays an average of $3.66 more a month than someone with a bank account.

“Those who are unbanked are four times more likely to pay fees to access their own money. That’s a significant difference,” Chakravorti said. “A lot of people have the idea that cash is a poor man’s best friend. We feel that the poor are actually getting screwed across the board. They’re definitely being hurt dealing with cash.”

The cost of using cash does not happen at the point of sale.

The added expense comes from the time and money it takes to get that cash. The average American spends 28 minutes each month (5.6 hours a year) going to the bank or ATM to fetch cash. And this doesn’t count the time spent waiting in line. The average fee to use a non-network ATM is now about $3.85 per transaction.

Other significant findings: African Americans are more than twice as likely as other racial groups to pay for access to cash. {snip}

A key cost factor is the way people receive their wages. Someone who is paid by payroll card (prepaid debit card) faced average costs more than four times as much as the rest of those in the survey. Those who had direct deposit or who received their pay in cash had the lowest fees.


The National Consumer Law Center (NCLC), an advocacy group for lower-income and other disadvantaged Americans, agrees that it’s important to give people access to the world of electronic payments, so they don’t have to rely on cash. {snip}



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  • Jesse James

    Cash is the free man’s best friend. The government, banks and big corporations would love to force every one into a cashless society. Then every time your teenager cuts the neighbors lawn the government and banks can get a piece of the action. When all currency is electronic we will be completely at the mercy of the government, the banks and the corporations. If you step out of line they can erase or freeze all your resources in an instant. Make a non-PC violation of the speech code and be fined instantly by some NSA computer generated levy of your bank account. The abuse that the government would get up to if all currency was electronic – the old Sci-fi credits- is unlimited. We have definitely learned this past year that there is no such thing as an impartial non-political Civil Service.

    Now for the issue of poor people having to pay more because they don’t have bank accounts. Things are always going to be more expensive for people who lack the intelligence to manage a simple check book. People who bounce checks by accident or by design shouldn’t be allowed to have checking accounts that they have proven to not be able to handle. It cost you more money to borrow money if you have defaulted on previous loans or have a history of financial incompetence or criminality…and it should cost more. Why should competent honest and responsible people have to pick up the tab endlessly for people who are exhibit none of those virtues.

    • sbuffalonative

      This is a very odd piece. I use cash whenever I can. I often find it faster than electronic transactions that can stall.

      I agree. This seems more like an attempt to get people to accept a cashless society where every cent you have and every transaction you make will be recorded with your photo linking you to products purchased, time of day, location; all the time feeding your spending habits to marketers who will target you based on your purchases.

    • Luca

      There are many variations on this wise old saying:

      Gold is the money of kings, silver is the money of gentlemen, barter is the money of peasants, paper is the money of fools and debt (plastic) is the money of slaves.

    • Alexandra1973

      I prefer to use cash for any transactions. No paper trail.

  • JackKrak

    Another example of the old standby : Newspaper headline – “Asteroid headed for Earth……”

    You know the rest.

  • Puggg

    But wait, would you want to put your dope money on the grid?

    And why do they think there’s $100 billion of tax loss? I don’t see how. If you use $3000 in cash from your dope dealing proceeds to buy a chrome spinning wheel (yes, I’ve seen ’em that expensive), it’s the same $3000 you won’t have if you used a bank debit card, and the business where you bought the things will generate the same profit from it (hopefully for them) if you paid by cash or debit, and the taxes will be the same.

    Also bank fees and this fee and that fee and this penalty and that penalty are such that I really doubt that those who are off the grid are losing out on dollars and cents.

    • Katherine McChesney

      What about the millions that immigrants send out of the country to latin American countries?

      There should be a law against that.

  • T_Losan

    A few things jump out:

    -Most laughably, the report was funded by “the MasterCard Foundation” and “MasterCard Worldwide” among others

    -Half of the purported “200 bn cost” comes from tax revenues the government can’t get its hands on. Yet US dollars are still the reserve currency of choice and hoarding of US currency represents IOUs that the government never has to honor, probably worth much more than 100 bn dollars.

    -A significant portion of the cost seems to be missed opportunities by individuals due to the 28 minutes per month they spend standing in line at the ATM. Yet the poor, whom the study say suffer disproportionately, do not have high potential earnings in half an hour, perhaps $4-$5.

    -Cash incurring “higher costs to businesses” just doesn’t make sense. If that were true, stores wouldn’t have minimum transaction values or tack on surcharges for credit/debit card use. Also, ever been to a cut-rate no-frills electronics store run by immigrants? They almost always are cash only.

    • Puggg

      “Time they spend standing in line at the ATM”

      Maybe there’s a reason why they’re standing in line at ATMs. Have you noticed the ATMs that used to be there that are no longer there? It’s as if the banks are trying to get you not to use the ATM because they don’t want you to get cash.

    • Fighting_Northern_Spirit

      Also, ever been to a cut-rate no-frills electronics store run by immigrants? They almost always are cash only.
      That’s because they cheat tax. I have a friend who worked for the California Board of Equalization. Credit and debit transactions can be traced, but cash can’t. This sort of fraud is rampant among ethnic businesses (particularly Armenian) in LA. They collect sales tax, and keep it. They even know which types of businesses never get audited, and flock there (medical supply being one).

  • Spartacus

    “Other significant findings: African Americans are more than twice as likely as other racial groups to pay for access to cash.”


    You mean access to someone else’s cash .

    • kjh64

      Ha, ha that’s funny and SO true.

  • Luca

    “Cash” is racist, it was designed so that blacks can not earn it or hold on to it.

    That’s why the American socialists invented welfare and EBT.

    • For blacks its government “gibs” on the front end.

      The back end is black market cash – dope, pimping, panhandling, pawning other people’s stuff . . .

      • Katherine McChesney

        …selling bootlegged items…dvd’s, “Louis Vuitton’ handbags…etc.

  • joesolargenius

    The real tax loss in this country comes from immigrant business owners and their workers not paying taxes , the first thing they do after starting a business is hire illegals so they can save that thirty percent that they would have to pay on top of a citizens wages.
    The first thing the GOP should do when they regain the presidency is to hire all the returning military veterans to make a twenty year sweep through America checking every business and their employees for tax compliance !

  • IstvanIN

    I don’t get this. I pay for most daily items cash: gasoline, groceries, small purchases like socks or oil changes. I use a credit car for big purchases and pay it off at the end of the month. Every two weeks I deposit my paycheck at my bank’s ATM and withdraw my allowance. I don’t go back to the bank until I get paid again. I don’t use my ATM card for purchases. I don’t see how anyone could spend more using cash unless they simply do not plan.

  • borogirl54

    There is a gas station near where I live, that charges a few cents less for cash than credit. They pass the credit card processing fee to the customer.

    • Strider73

      Several stations in central FL charge the posted price only if you use cash or that brand’s credit card. A few honor that price for cash only. The difference is 5-15 cents, depending on the station.

      And the article’s 2nd graf is wrong. Every Sam’s Club I have ever purchased gasoline at requires payment by credit or debit card. Cash is not accepted.

      • But don’t you get a discount at Sam’s Club if you buy stuff?

        • texasoysterman

          Yes, you do. In the case of gasoline, the savings is occasionally significant. Two weeks ago in Pittsburgh, corporate gas stations were charging $3.49 gal. while my Sam’s price was $3.24 gal.

    • As they should.

    • MBlanc46

      We’re in the Detroit area a couple of times a year. I’ve noticed that for the past couple of years, cash discount at gas stations is re-appearing. Not yet in the Chicago area that I know of.

  • A Freespeechzone

    My response….I don’t give a crap WHAT anyone thinks–blacks are where they are because of their culture and ongoing BAD DECISIONS.

    I don’t own that….they do…. I don’t care.

  • T_Losan

    If I pay the authors enough, perhaps I can get them to write an article on the cost of Urban Americans. I can see the text now:

    “But there is a cost to Urban Americans that’s not always taken into account. Those costs include murders, rapes, burglaries, social unrest, perpetual litigation, benefit payments, incarceration costs, and the ethnic cleansing of white americans.”

  • dd121

    This obviously calls for a new Federal program. The CFM (Cash for Minorities) program will provide interest free cash to the poor. If they don’t have cash to be distributed interest free, the government will provide up to $1000 a month to make up the difference. The only requirement will be to register to vote five time within your district. /sarc

  • What about the fees the card issuers levy on every transaction?

    Stores don’t eat that 2 to 5 percent fee. They raise prices to compensate.

    • This is why some retailers and lots of service providers will give cash discounts.

    • sbuffalonative

      The premise of this article is bizarre.

      • T_Losan

        Look at the sponsors: MasterCard

  • RisingReich

    See – even green money is racist. Everything on earth works against black people.

    Alternatively, a campaign will be started to outlaw cash because this proves point blank that ‘cash also bes raycis.’

    • Cash is racist because it is on white paper and the green reminds them of the lawns they don’t maintain.

  • bigone4u

    The Feds track electronic payments in order to create dossiers on every person in the country. Eventually, the info in those dossiers will be used against us in future kangaroo courts. The Feds own us because they:

    1. Can deny us medical treatments via the Obamacare takeover.
    2. Can deny us food due to shutting down our credit cards.
    3. Can deny us jobs by labeling us racists.
    4 Can deny us heat in the winter through smartmeters.

    Cash works against the Feds because with cash we have a degree of freedom. The Tufts study is just furthering the NWO agenda, ultimately designed to create a world monetary system that is entirely cashless so that our lives can be tracked and controlled by the Power Elites. The costs cited in the study are trivial in relation to the benefits of freedom.

    • Carney3

      Plenty of people have had their utilities cut off long before smart meters.

      Holy moly not everything is a conspiracy.

      • robinbishop34

        Not a conspiracy; an agenda.

  • Boiled down, this article says that people who have bad credit experience additional trouble and inconvenience paying for things. Wow! Who’d have imagined that? In another hard-hitting story, “Today” will inform us that dogs chase cats.

    • Or that cats catch mice.

      • Shhh! They’re saving that one for November.

        • Fighting_Northern_Spirit

          People of Feline Persuasion.

  • sbuffalonative

    This article has multiple agendas none of which are a concern for the poor.
    One clear objective is that they’re trying to make people who still use cash believe they’re stupid.
    I will be using cash when I can for as long as I can (which doesn’t seem to be much longer).

  • libertarian1234

    They’d really get in an uproar if more people worked and conducted transactions off the books, or “under the table,” as they say.

    Then to add insult to injury a barter system could be put into play as well.

    And I’m wondering how much angst bitcoins might be causing them nowadays.

    • WR_the_realist

      Didn’t you know that bitcoins are only used by drug dealers, terrorists, and child pornographers? That’s the story the media and government always tell us about any currency that the government can’t track and control.

  • MBlanc46

    “The National Consumer Law Center (NCLC), an advocacy group for
    lower-income and other disadvantaged Americans, agrees that it’s
    important to give people access to the world of electronic payments, so
    they don’t have to rely on cash.”

    Just another gibsmedat.

    • The NCLC means “So they can continue to drive up consumer prices by stiffing creditors and retailers.”

      I just thought I’d clarify that issue.

      • MBlanc46

        I can just hood rats running wild with a Visa card in their pockets.

  • Rhialto

    Does this NCLC advocacy group have any concern for White males who have no income because they have been unemployed by immigration and Diversity?

    No, because White men are Privileged, therefore they can never be discriminated against, QED, Ipso Facto.

  • Dunnyveg

    I like the sleight of hand shown in this article. I pay cash for all but my biggest purchases. I have a bank account, and don’t pay any of the fees mentioned in this article. The reason the liberals want us to pay with traceable payment methods is so they can keep tabs on every move we Americans make. It’s yet one more example of liberals who think they are as smart and virtuous as Americans are stupid and evil.

  • Charles W.

    The move towards a global electronic currency controlled by a global central bank is one of the central goals of those who seek to impose a one world government dictatorship.

  • WR_the_realist

    I prefer paying with cash whenever practical because it is the only form of monetary transaction that is not traceable by my enemy, the government. Whenever you make a purchase by credit card you should ask yourself, “Would I mind if my worst enemy knew about this purchase?” If the answer is yes, try to use cash instead.

  • robinbishop34

    “I am surprised this “study” didn’t mention that cash is extremely unsanitary…”

    Someone should tell this genius.

    • withcaution

      I think it’s far more unsanitary for the unlucky person next in line for that cash (no doubt a “producer”)

  • Fighting_Northern_Spirit

    Revised headline: Criminals on the run and deadbeats living off the grid to avoid garnishment pay higher fees; blacks and Hispanics impacted the most. (Dominance by banks and gov’t is a separate question on which I’m not making a comment.)

  • zek

    One could hardly expect such perfidy from a man named Weisbaum.

  • They don’t accept cash?

    “This Note Is Legal Tender For All Debts, Public And Private”. I’d bet the cops could make one of these invading parasites take cash, once they explained his alternatives.

  • JohnEngelman

    I have no debts. I want to keep it that way.

    • Smart man. I’ve noticed that not having any debt makes for an extremely tranquil marriage. It lowers the stress level to just about zero.

  • Bossman

    Sure, it cost more for being stupid and having to operate outside the system because of criminal behavior.

    • Good, old-fashioned irresponsibility will also do the trick. One friend’s wife couldn’t get a checking account because of her lousy credit. She didn’t prioritize expenses. I gave them the financial advice and helped them write up the budget that let them boot-strap themselves back into a normal existence. Fifteen years later, they own their own home. They weren’t criminals, but they lacked self-discipline, and ended up having to pay cash for everything for quite a few years.

      For persons wanting to make untraceable purchases, I would recommend paying for supermarket groceries with a debit card, but taking cash back with each purchase. Your bank records will not show anything but the total amount; not that you took cash back. This is not like going to an ATM, where the cash withdrawal will show on your statement. A fedgov snoop examining your bank statements will not be able separate the money you have spent on groceries from the amount you have taken home as cash. Also, there are no transaction fees for this! When you have saved up enough cash, then you buy the whatever-it-is that you want to keep secret.

  • Northern American-Nationalist

    Chakravorti said, “. . .We feel that the poor are actually getting screwed across the board.”

    It’s the scholarly language coming from those who administered the study that allows you to know how serious is this work; of course, maybe they’re just trying to communicate directly to the intended target audience: dullards, who find it difficult to plan ahead financially.

    The lowest common denominator social phenomenon is why multiracial societies are more problematic than monoracial societies for its more responsible and productive members.

  • Northern American-Nationalist

    Yes, PLEASE use a medium of exchange that helps us track your every movement and concern more effortlessly than without! Government cameras at most street corners and flying killer robots for your local police force are just not enough security for us. . .I mean YOU. . .

    This is why I started using cash as much as possible recently, which happens to be almost always, and yet I’ve suffered no added (financial) costs to access my money; lo and behold, it just took a little self-restraint and planning ahead!

  • Puggg

    I think you’re right that this study is far more banking industry sandbagging than concern for blacks and Hispanics. But what’s worst of all is being behind a black customer paying in cash that can’t seem to come up with a proper amount, they spend all day digging through purses and handbags trying to come up with enough for what they bought. They didn’t think to count their money, in as much as the money isn’t in fifty different places in their purses and bags, before they started loading up their carts.

  • disqus_Xz3UA6obwj

    In addition, because of the costs incurred by business owners like you, the costs of goods is increased to make up for it, so in reality debit and credit card purchases cost all of us money, including those who use cash.

  • willbest

    You are saying that handling an additional 2 million dollars in cash wouldn’t have additional costs?

    I know you can get different accounts (mine has unlimited checks), but on the cash side my bank starts charging me a 1.5% processing fee for cash deposits in excess of $10,000 every month. I think they might have even lowered it to $5k at some point.

    • There are federal reporting requirements for large cash deposits.

      The requirement is zero if anyone is “suspicious”.

  • willbest

    I never understood this. Every time they come out with a report about bank fees my jaw drops in how stupid people must be. In the last 15 years I have paid $0 in bank fees which includes out of network ATM fees and it hasn’t been at all difficult to do even when money has been tight.

  • Zaporizhian Sich

    The elites are not white, either in spirit or racially. Just because they look white does not mean they are. Their attempts to interfere with and control every move we make is proof of that. By their actions we know they are not white.

  • Zaporizhian Sich

    I pay in cash wherever possible, do not use credit cards and if I have to make a big purchase I just take out a loan. Every week I withdraw the money I need for expenses and there is no record of who purchased what. It is one way I give those who cannot be names a middle finger every time I make a purchase. It is cheaper in the end to pay up front or through a personal loan from a credit union than paying for things with credit cards and their usurious interest rates.

    • When I bought my 1995 Saturn, I paid cash. It was $16,100 for a loaded new car, and felt good. I was told I needed to listen to a lease talk, so I got up to leave and said I would buy a Toyota. They let me have the car for cash, and not any more silly stuff about a lease.

      I bought some beautiful antique guns in Denver for cash, also back in the early 1990s. That was wonderful.

  • Jesse James

    Sounds like you have plenty of thunder left 🙂

  • withcaution

    How is the government not getting 100 billion in taxes loosing money? By that logic the government is loosing trillion by not having a 100% income tax.

  • robinbishop34

    Let’s see, a gun, liquor, smoke wafting in the air, cornrows, wad of one dollar bills in mouth, and sugary drank.

  • Paleoconn

    This is one MSM article that should have never appeared on AR. Somebody dropped the ball. Cash is king. Debt is slavery.