It’s easy to forget that cash is costly to access, until you’re paying an A.T.M. fee or spending time riding a bus to a check-cashing window when you could have been working. Now, a study published on Monday morning has quantified the cost of cash, and who gets hit the hardest. The unsurprising answer: low-income people.
In the U.S., the poorest individuals surveyed spend an average of more than three times as much as the wealthiest ones to access cash—specifically, about eighty-one cents a month for those earning under twenty-one thousand dollars annually, compared with twenty-five cents for those earning more than a hundred thousand dollars, according to the study, published by the Institute for Business in the Global Context at Tufts University.
What’s more, low-income people tend to spend far more time getting cash—time that might have otherwise been spent earning money, running errands, relaxing, whatever. On average, Americans spend twenty-eight minutes a month travelling to get cash, but that time isn’t evenly distributed. People who don’t use a bank spend about five minutes longer getting to the place where they can get cash, and unemployed people spent nearly nine minutes more—and that’s not including time spent standing in line.
“The truth is every payment instrument adds a disproportionate cost onto the poor,” said Bhaskar Chakravorti, senior associate dean for international business and finance at Tufts’ Fletcher School and co-author of the study. “Yet cash we tend to think of as the poor man’s best friend. That is where we’re wrong.”
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View the Cost of Cash study