The Use of Cash Costs Americans $200 Billion Per Year

October 4, 2013
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Using cash is costing Americans $200 billion per year, or an average of $1,739 per household, according to a new study by Tufts University.

The report, The Cost of Cash in the United States by the Fletcher School at Tufts University, looked into the financial, time and productivity costs associated with cash use.

Theft ($40 billion from businesses and $500 million from individuals) and ATM fees of $8 billion make up a portion of these overall costs. But the majority of these costs come in terms of time: the average American spends 28 minutes per month traveling to get cash.

It probably comes as no surprise that the cost of cash is higher for the poor and unbanked Americans. The unbanked pay on average about $3.66 per month more than banked consumers. Poor Americans carry larger amounts in cash and pay more fees for cash transactions than wealthier Americans. Those without bank accounts use greater amounts of cash in a month than those with bank accounts.

The cost of accessing cash also varies by source. Those receiving income by prepaid or payroll card paid more than four times as much as the rest of the sample. Electronic funds transfer of direct cash transactions have the lowest fees. The study also shows that checking cashing services receive $200 million in fee revenue.

Other interesting findings of the study:

* Most people carry small cash balances. Those in households that earn approximately $20,000 to $100,000 in annual income say they usually carry less than $100.

* Men carry twice the amount of cash than women. Men also use approximately 50% more cash than women.

* Approximately 80% of ATM transactions are cash withdrawals. The average out-of-network ATM transaction fee is $3.85.

The Institute for Business in a Global Context at Tufts University conducted this survey of 1,000 Americans about how respondents obtained cash, how often they exchanged cash for checks or bank deposits, the aggregate cost of cash management, and the determinants of those costs.

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3 Responses to The Use of Cash Costs Americans $200 Billion Per Year

  1. DOn GOnsalves on October 4, 2013 at 2:48 pm

    This is a very stupid article.The alternative is to carry a lot of cash with you so you do not have to obtain cash that often. Then you run the risk of being robed. AS a former CFO and MBA in finance I say once agin this is a very
    stupid article

  2. Just Sayin on October 5, 2013 at 9:34 am

    We teach our kids that its OK to be in debt and pay for convenience. Imagine taking $20 out of an ATM and incurring $3.85 in fees!! That’s a 20% fee for convenience.
    I always wondered about the “check cashing fees” commercials I see. $3 to cash a check times 26 pay cycles…. why not open a no minimum balance account and save yourself $80 a year!

    My parents brought me up with the idea that if you can’t afford to pay for it now, you shouldn’t buy it. (house is exception) Look at how much the bank takes in fees for a few pennies of interest. The day a bank tries to take a fee from me is the day I take my money from the bank.

  3. Joe Zingher on October 5, 2013 at 11:25 am

    Sounds like the banking industry and the government are trying to take control over every aspect of our lives. The IRS, in implementing Obamacare, is statutorily empowered to simply take money directly from bank accounts to pay fees and fines associated with Obamacare.

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