The cost of living crisis has led to an upsurge in cash payments for the first time in ten years. More people are withdrawing cash as they feel it is easier to budget and gives them greater control over how much they spend.
According to The Times:
The amount of cash withdrawals shot up by nearly 20 per cent last year, according to Nationwide, with more people choosing cash over cards because they find it easier to keep on top of how much they are spending.
The building society reported that 30.2 million withdrawals were made from its cash machines last year, up from 25.5 million a year earlier.
Customers withdrew an average of £105 per visit — a 2 per cent decline on the previous year — but this was still 25 per cent more than pre-pandemic levels. Inflation has been running at more than 10 per cent since July last year.
Otto Benz, of Nationwide, said: “For the first time in years we are seeing a natural rise in cash withdrawals as people return to using cash to help avoid getting into debt.
“Far from the end for cash, it shows that the future of money management is constantly evolving.”
The use of cash steadily declined since 2009 after the introduction of contactless payments, which now account for more than a quarter of all transactions.
Cash use plummeted particularly sharply at the start of the pandemic when people were concerned that they might get infected with Covid by handling money.
Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: “Sometimes it’s easier to manage your money if you can physically see how much cash you have left.
But you need to think carefully about the security of your money. The idea of withdrawing your weekly or monthly pay and leaving it in envelopes around the house raises worries about theft.
“There’s been a boom in social media posts promoting ‘cash stuffing’, where you mark envelopes with different kinds of spending — like food shopping or going out — and stuff each one with the cash you want to spend on it that week.”
Separately, data showed that the use of “buy now, pay later” schemes hit an all-time high at Christmas. The latest barometer from Equifax reported that a third of British adults have used one of the schemes, which allow online shoppers to defer payments, usually interest free.
The credit agency’s data suggests that 4.1 million people used “buy now, pay later” for the first time in 2022 — with 13 per cent of consumers having used it to pay for a meal or takeaway and a similar proportion for groceries or toiletries.
