Let's take a look at U.S. consumers' ownership and use of payment instruments from two ends of the household income distribution. You can do this yourself with interactive charts depicting data from the 2019 Survey of Consumer Payment Choice, where you can slice and dice consumer payments behavior by income and age segments.
Payment instrument ownership is highly correlated with income, a difference that is pronounced in the case of credit cards: only 53 percent of households with income less than $40,000 own a credit card, compared to 93 percent of households with income of $75,000 or more, according to the 2019 survey. As the Atlanta Fed's Oz Shy points out in a recent working paper, "Low-income consumers are not only constrained with spending, but also with the type and variety of payment methods available to them."
Just like payment instrument ownership, payments instrument use varies with income. In the 2019 survey, the practices of consumers in the lower-income and higher-income categories are mirror images of each other:
- Consumers in households earning less than $40,000 made 30 percent of their payments in cash and 15 percent with credit cards. "Payments" include purchases, bill payments, and payments to another person.
- Consumers in households earning $75,000 or more made only 16 percent of payments in cash and 32 percent with credit cards. These consumers made more payments overall: 82 a month compared to 55 for consumers in households earning less than $40,000.
These two groups comprise roughly similar shares of U.S. households: 36 percent of households have income less than $40,000, and 40 percent, $75,000 or more, according to the Federal Reserve Survey of Household Economics and Decisionmaking
. You can compare the behavior of the middle third of U.S. households on the web page of the Survey of Consumer Payment Choice.
By Claire Greene, a payments risk expert in the Retail Payments Risk Forum at the Atlanta Fed