Study estimates the use of cash costs $200 billion a year

Even in the age of PayPal, Square and Bitcoin, many people pull out a green piece of paper to pay for their morning coffee without giving the transaction much thought.

Somebody, though, had to get that piece of paper to your neighborhood ATM, and you had to spend some gasoline (or shoe leather) to get it out. Cash also carries a risk of theft, and it allows some unscrupulous people to evade taxes.

Researchers from Tufts University added up all of those costs and came up with a big number. They say that based on “highly conservative assumptions,” the cost of cash in the U.S. amounts to $200 billion a year.

Households pay about $8 billion in ATM fees and lose $500 million a year to theft, but the study puts their total cost much higher, at $43 billion. Most of that comes from assigning a value to the time that people spend going to ATMs or check-cashing stores.

Theft is a much bigger issue for businesses, accounting for $40 billion of their more than $50 billion in total cost of handling cash. The biggest loser in the cash economy is government, which of course creates the cash in the first place. Printing and distributing the money costs only $1.2 billion, but the study estimates that tax evasion amounts to $100 billion a year.

Men carry nearly twice as much cash as women do, the study found, and people over age 55 hold roughly twice as much as the 35-and-under crowd. The younger group is more likely to incur fees for accessing cash, though. Rich people also tend to carry more cash.

The unbanked poor, however, pay a disproportionate share of the cost of cash. “The persistence of a cash economy creates social inequity and has the effect of a regressive tax,” the study concludes.

More in Herald Business Journal

Peoples, HomeStreet banks bump lowest salaries after tax cut

The banks with Snohomish County branches will raise minimum salaries for employees to $15 an hour.

Electroimpact cuts Mukilteo staff by 9 percent

“What we’re missing now is a monster anchor project,” the company’s VP said.

Exotic animals find compassionate care in Bothell (video)

At the Center for Bird and Exotic Animal Medicine, vets treat snakes, hedgehogs and even kangaroos.

How can you tell if you are getting good financial advice?

Assume that it’s still the same buyer-beware market that has always existed.

Amanda Strong (left) tries on an Angel of the Winds Arena hat as she and Courtney Brown hand out gift bags after the renaming ceremony Dec. 13 in Everett. The new name replaces the Xfinity name. (Andy Bronson / Her file)
Angel of the Winds to break ground on $60M casino expansion

“We think we’re on the cusp of becoming a major resort.”

In this Dec. 20, 2017, photo, a clerk reaches to a shelf to pick an item for a customer order at the Amazon Prime warehouse, in New York. (AP Photo/Mark Lennihan, File)
Amazon’s potential HQ2 sites leaves many cities disappointed

And yet, some municipal leaders are looking at the bright side of being rejected.

How do you retrieve an errant Boeing 737 from a muddy slope?

Turkish authorities used cranes to lift a plane that skidded off a runway.

Don’t take economic forecasts to the bank — or the casino

Air travel delays could spur a rebirth of passenger rail service.

Emirates orders 20 more Airbus A380 jumbos, saving program

The Dubai carrier also has options to buy 16 more. The program seems safe until 2029.

Most Read