Fed report shows consumers are keeping more cash on-hand during the COVID-19 pandemic

A majority of consumers, 70 percent of those surveyed, say that COVID-19 concerns have not caused them to avoid carrying or storing cash, according to a recent survey conducted by the Federal Reserve System’s Cash Product Office (CPO) and the Federal Reserve Bank of Atlanta.

The Federal Reserve conducts an annual consumer survey to better understand payment behavior and preferences. Since the last study in October 2019, before the spread of COVID-19, the Fed completed a follow-up survey in May 2020 to understand changes in payment practices since the start of the pandemic. The Federal Reserve Bank of San Francisco recently published both the CPO’s 2020 Diary of Consumer Payments Choice and a supplemental survey conducted during the pandemic.

The report, Consumer Payments and the COVID-19 Pandemic: A supplement to the 2020 Findings from the Diary of Consumer Payment Choice, indicates that survey participants more than doubled the amount of cash they store at home and also increased the amount of cash they carry in their wallets.

In addition, as shelter-in-place mandates went into effect nationwide, the majority of consumers, 63 percent, reported that they did not make any in-person payments from March through May. Of the individuals who reported making in-person payments, 59 percent used cash at least once, a similar rate to the 57 percent of individuals who used cash at least once in the prior year’s survey.

“Comparing the most recent pre-pandemic data from October 2019 with responses from May 2020 provides insight into how consumer payment behaviors might evolve,” said Mark Gould, Chief Operating Officer of the Federal Reserve Bank of San Francisco and Cash Product Director of the Federal Reserve System’s Cash Product Office. “As domestic and international demand for cash continues to increase substantially, its role as a store of value remains strong, particularly during times of crisis.”

The 2020 Findings from the pre-pandemic Diary of Consumer Payment Choice report also found:

  • While payment options continue to grow, debit cards, cash, and credit cards remain the most used instruments. Debit card transactions accounted for 30 percent of payments, cash was used for 26 percent, and credit cards were used for 24 percent.
  • Cash use across all age cohorts was generally unchanged. While cash use is prevalent among people of all ages, the share of cash use is highest among individuals aged 18 to 24 and those 55 and older.
  • Online shopping may be increasing, but cash is used most for in-person transactions. Of the 87 percent of non-bill payments made in person, cash was used for 35 percent of them.

“Many consumers value and prefer to use cash for everyday purchases, while others use cash as a backup, or for the convenience of small value payments,” said Gould. “The wide range of use for cash continues to show its importance to consumers despite the number of competing payment options in the economy.”

The reports explore various aspects of cash usage, including detailed trends, payment preferences, cash holdings by demographic cohort, and payment use by transaction characteristic and merchant type. A demographically-representative sample of 3,016 individuals participated in the October 2019 Diary and 2,737 participated in the 2020 supplemental survey.

About the Diary of Consumer Payment Choice

The Diary is a survey designed to study payment behaviors using a nationally representative sample of U.S. consumers. Participants are asked to record information on all transactions – purchases, bill payments, deposits, withdrawals, etc. – conducted during assigned, overlapping consecutive three day periods. The Diary of Consumer Payment Choice is a collaboration between the Federal Reserve Banks of Atlanta, Boston, Richmond, and San Francisco (Cash Product Office).

The Federal Reserve Bank of San Francisco (SF Fed) serves the public by promoting a healthy, sustainable economy, and supporting the nation’s financial and payment systems. With offices in Los Angeles, Seattle, Salt Lake City, Portland and Phoenix, the Bank serves the Twelfth Federal Reserve District, which includes one-fifth of the nation’s population and represents the world’s fourth-largest economy. As part of the nation’s central bank, the SF Fed informs monetary policy, regulates banks, administers certain consumer protection laws and acts as a financial partner to the U.S. government.