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Cash Makes a Comeback

But cash isn't king for retailers, who'll likely see bigger drop in sales

By Peter Fearon, Newser Staff

Posted Nov 24, 2008 2:15 AM CST

(Newser) – Americans are reverting to cash for purchases in increasing numbers, according to top retailers Wal-Mart, Target and JC Penney. The shift away from credit is expected to further reduce spending by consumers—who will be limited to cash-on-hand purchases—not just during the holiday season, but during what could be a deep and long-lasting recession.

An increasing number of consumers have maxed out their credit cards, or are using cash as a way to keep themselves on a stricter budget. "I think this is a new way of life," says one consumer who switched to hard cash several months ago. "I like to be able to know that we paid for something. I hate monthly payments when you use a credit card."

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Kira Limer pays cash for a book at Barnes & Noble in New York. More consumers are paying cash at a time when Americans hold more than $850 billion in credit card debt, four times as much as in 1990. (AP Photo/Mark Lennihan)

More Americans are paying for purchases with cash and leaving their credit cards at home, according to leading retailers. (Photo: Business Wire)

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Consumers are really struggling to find sources of cash to make purchases. The rapid job losses are taking a big bite out of labor incomes."
- Scott Hoyt, senior director of consumer economics at Moody's Economy.com

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Cash Makes a Comeback