Cash is no longer king, even for purchases costing under a fiver

Nearly one in ten people say they don’t withdraw any of their income in cash and 29 per cent say they only withdraw up to a tenth of their income before they spend it.

However, handing over plastic at the till rather than hard cash could lead to people being less canny when it comes to finding value for money, according to leading psychologist and behavioural expert, Dr Jane McCartney.

“For many years psychologists have known about what is called the ‘pain of payment’, by which consumers are less likely to impulse buy and consider their purchases when using cash as opposed to plastic for payments,” she said.

“The behavioural attitude of ‘it doesn’t really count, if it’s on the card’ has been shown to be a strong decoy away from the actual reality of purchasing and spending. For some, the emotional pain of parting with well-earned cash can control and curb impulse spending significantly.

“One of the potential difficulties of just using plastic for payments is that consumers never really get to know what it is like not to be able to properly afford things. When cash was the only means of payment, generally if you didn’t have the full amount, you didn’t have the goods.

“Research shows those who pay with plastic will tend to focus on the benefits of a purchase, whereas those who pay with cash have a tendency to think about the cost more.”

The research also highlighted that people are becoming increasingly comfortable in using their debit card to pay for small amounts with three quarters (75 per cent) of those surveyed stating they would happily use a debit card for a purchase of under £5.

While only three per cent would use a debit card for a purchase of £1, almost one in five would pay for a purchase between £1.01 and £2 using their card.

The survey also showed that men tend to carry more cash than women with 34 per cent saying they have over £30 compared to just 21 per cent of women.