Cash usage rises as people seek to manage budgets

Cash continues to remain a popular payment option among Brits, despite the surge in digital alternatives. 

According to Nationwide, there were 32.8 million cash withdrawals from its 1,260 ATMs last year. 

That’s 10% up on 2023. 

Cash withdrawals peaked just before Christmas, with people taking out £97.9 million in the week commencing December 16th. 

This is 1.8% up on the same period of 2023, and the highest amount dispensed in a single week since before the pandemic. 

The run-up to Black Friday also saw an increase in activity, as people withdrew more than £85 million in the week commencing November 25th. 

That’s 12% higher than in the previous year. 

Between 2014 and 2022, Nationwide had seen a steady decline in the number of cash withdrawals. 

So what changed in 2022? 

Well, inflation soared throughout that year, peaking at a 41-year high of 11.1% in October. 

And although the inflation rate has eased since then, that doesn’t mean prices have come down. 

Food inflation alone is expected to rise from 1.5% to 3% this year, according to research by Peer Hunt. 

So it seems likely that many people are favouring cash in order to manage their budgets at a time when living costs are continuing to soar. 

Otto Benz, director of payments at Nationwide Building Society, said: “The rising cost of living continues to impact people and many are opting to budget with physical money to avoid getting into debt.”

We now have more choice than ever when it comes to paying for goods and services, with digital innovations such as Apple Pay and PayPal redefining what making a transaction looks like. 

But while many people might find these alternatives easier and quicker to use, that doesn’t mean physical notes and coins are being consigned to the past. 

After all, cash remains a fast and convenient option for many people, and it’s widely accepted in most places. 

And as we’ve learned in the Nationwide study, people find using cash helpful for managing their budgets. 

So while debit cards might have overtaken cash as the most frequently used payment method in the UK, notes and coins still have a valuable part to play, particularly for those who need to keep a close eye on their outgoings.