Cash payments rise for first time in 10 years - does spending in cash save you money?
Shoppers made 6.4 billion payments using cash in 2022 - a seven percent rise on 2021, according to UK Finance.
Many people find it easier to budget when using physical cash.
The figures echo evidence from the Post Office which saw personal cash withdrawals rise to £836.21 million in June - up 12.5% year-on-year.
The figure was also a 2.4% rise month-on-month.
Martin Kearsley, Post Office banking director, said: “These figures clearly show that Britain is anything but a cashless society and people are reliant on cash as the tried-and-tested way to manage a budget.”
Cash was the second most popular method of payment last year, but it still fell way below the use of debit cards.
About one million people in the UK make payments using mainly cash.
However, 22m people used cash once a month or not at all last year, UK Finance says.
While cash use increased, so did debit card use, with people often using it for small, but more frequent transactions.
Debit cards were used in half of the 46bn payments made by consumers and businesses in 2022. Debit cards were used in 57% of transactions made by consumers alone.
What's driving the spending?
Contactless cards are being increasingly used for small purchases, whereas coins and notes would have been used previously. The average amount spent on a contactless card payment was £15.10.
Hybrid working means commuters are buying more individual train tickets by debit card where they would have had annual or monthly season tickets pre-pandemic.
Anecdotal evidence suggested people are not doing as many 'big shops' at the supermarket, instead spending small amounts at a time, and visiting more frequently.
UK Finance still expects cash use to decline once the cost of living crisis eases over the coming years.
A total of £3.35bn was withdrawn and deposited at the Post Office in June - the highest figure since last September.
It is not clear whether this is due to an increase in the use of cash, or because the number of high street banks has plummeted. The Post Office has partnerships with more than 30 banks, building societies and credit unions meaning 99% of UK bank customers can access their accounts at the Post Office.
But Mr Kearsley, added: “Postmasters continuing to handle well over £3 billion each month demonstrates just how vital being able to deposit and withdraw cash securely and conveniently is for millions of people."
Does spending in cash save you money?
For those living on very small budgets, spending in cash can be helpful as long as you stick to just spending what you've taken out and know you can afford.
The issue with cash budgeting is that there are many transactions which are done digitally or online. This is where budgeting with cash can come unstuck, as it's hard to keep on top of those few pounds here and there for things like public transport or an essential ingredient for dinner.
Having to hand over physical cash to buy something, and seeing that amount become smaller through the week, can certainly focus the mind and make someone more mindful of what they're spending.
One thing to bear in mind is that if you only spend in cash you won't be building up any credit history.
It can also be easy for that loose change to 'magically' disappear on firvellous things after breaking into a note, so discipline is key as with any money saving plan.
If you want to spend cash, it's worth making a note of the things you had to buy on card and deducting that from next week's cash budget.
Alternatively, you might decide to set up a dedicated 'spending' bank account where you put in a certain amount each month and only use that account for purchases.
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