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There’s a lot of paper money circulating out there, despite the movement toward digital transactions. The current total value of U.S. currency in circulation is $2.4 trillion, as of July 2025. That includes all physical paper bills and coins circulating both within the United States and internationally.

You may have noticed in your own daily life that you tend to use less cash in your transactions — whether making a small purchase at a store, paying for a taxicab (now replaced digitally by Uber) or checking out at a fast-food restaurant. It’s easier to use a card — either credit or debit — for most purchases. And some places don’t even accept cash.

Now, with the new tax-free status of tips, you’ll find even less use for cash. The barber or manicurist or waiter doesn’t benefit from not declaring tips they receive in cash.

Still, many businesses do offer a discount for cash to avoid paying interchange fees on credit cards. But even that cash request is often fulfilled using Zelle, or ACH bank-to-bank transfer or a debit card.

Now that online banks such as Discover and Capital One can offer rewards for debit usage, either points or cash back, the use of plastic has become more widespread.

In short, who needs paper money anymore if you lead a legitimate financial life and are not part of a drug ring or other underground activity?

Surprisingly, the latest survey from the Federal Reserve — the 2025 Federal Reserve’s Diary of Consumer Payment Choice — shows that cash remains the third most popular transaction medium in our society, though digital transactions are accelerating rapidly.

In 2024, consumers made an average of 48 payments per month, up two payments compared to 2023. And while the number of payments is growing, the majority of payments were “remote” — not at the point of sale — revealing the impact of online transactions. And most were made digitally. A total of 45% of remote payments were conducted using a mobile phone, followed by computers at 25%, according to the report.

Cash is still the third most-used form of payment, behind credit and debit cards. But cash was used for only 14% of all payments — and the dollar volume per cash transaction tends to come from “small-value” payments of under $25.

You likely won’t be surprised that lower-income families tend to use more cash. The report says that people in households earning less than $25,000 per year used cash for 24% of payments. They are more than twice as likely to use cash as people in households earning more than $100,000.

Again, not surprisingly, older people do more transactions using cash. Adults aged 55 and older used cash for 19% of payments, nine percentage points higher than those aged 25-54.

That doesn’t mean cash is going away. The Fed’s report shows nearly 80% of consumers held cash in their pockets, purses or wallets at least one day during the reporting period, a finding that has been consistent since 2018. But the amount of cash held on person and available for spending declined to $67, an average of $7 less than in 2023.

Leaving aside the potential for stablecoins and cryptocurrencies to capture transactions in the future, the world of digital money transfer will continue to grow. Unless you’re trying to keep your financial life a secret, digital money tracking from online banking and debit/credit cards to transactions using PayPal, Zelle and other transfers allow you to manage your finances more efficiently.

While cash slips through your fingers, a digital record of your night of partying or your shopping trip stares you in the face and dares you to justify your budget-busting spending. Programs like Quicken Simplifi, NerdWallet, Monarch and YNAB (You Need a Budget) not only track spending but remind you to stick to your money diet.

Transactions have moved swiftly from carrying money or a checkbook to the ease of using your cell phone to transact. Adults aged 18 to 24 were more likely than any other cohort to pay with a mobile phone, using their phones for 45% of all payments — both remotely and in person.

There is one place where cash is not likely to be replaced — even among the younger generation. While inflation has certainly had an impact on these payments, the tooth fairy still deposits money under the pillow in crisp bills. And that’s The Savage Truth.

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(Terry Savage is a registered investment adviser and the author of four best-selling books, including “The Savage Truth on Money.” Terry responds to questions on her blog at TerrySavage.com.)

©2025 Terry Savage. Distributed by Tribune Content Agency, LLC.