It’s easy to forget that cash costs money to access, until you’re paying an A.T.M. fee.
A study 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 81cents a month for those earning under $21,000 annually, compared with 25 cents for those earning more than a $100,000.
What’s more, low-income people tend to spend far more time getting cash. 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.”
Wealthier people and lower-income people tend to access cash differently. Wealthier people are more likely to have bank accounts, which means that they can visit an A.T.M. run by their bank without paying a fee; the same goes for cashing checks. Lower-income people, meanwhile, disproportionately use check-cashing services, which are known for their high add-on charges. Plus, employers have started compensating low-paid, hourly workers with prepaid cards that come with huge fees.