What paying with plastic says about you

Ways that Boomers show their age: wearing sensible shoes, relying on reading glasses and paying for a cup of coffee with cash.

There's a growing generation gap when it comes to using plastic for purchases under $5, a survey out this week by CreditCards.com reveals. More than half of Millennials are likely to whip out a card for a pack of gum or a newspaper, while 77% of people older than 50 still dig out cash.

"I think those people mostly use cash because that's the way we've always done it," says Matt Schulz, senior industry analyst for CreditCards.com. "But Millennials have grown up doing things like going to school and using a prepaid card to pay for lunch. For a lot of younger folks, cash is just something that they don't carry around."

Schulz sees the trend of plastic replacing cash picking up steam as Millennials and the presumably even more tech-savvy generation after them grow older. The switch to plastic is picking up for a few reasons:

• Technology has made paying with cards just as fast as paying with cash.

• Rewards programs have made charging attractive.

• Banks have spent decades getting consumers and merchants comfortable with cards.

The plastic cards young people are reaching for at cash registers these days are overwhelmingly debit. Those ages 18 to 29 favor debit over credit by a ratio of almost 3 to 1, the survey of 983 credit card holders showed.

That pro-debit preference is something that Schulz sees changing in the future, due to consumer protections and the rewards offered by credit cards.

"As those folks get a little more secure financially, get a little more money in their pockets, they'll start to switch," he says.

While debt-shy people can be more comfortable with debit over credit, they may be overlooking its downside.

"I don't know that they're fully aware of the risk," Schulz says. "In this time of worry about data breaches, if your debit card information gets stolen, you are at risk of losing real money, money you might need to make a car payment or pay the rent."

Claims take time to investigate, and in the meantime, the debit card-using consumer is on the hook, he says, "whereas with a credit card, the bank often will just waive that charge and you won't be out any money."

Another downside to debit cards is the fact that you don't build a credit history when you use them, says Melinite Uppermost, senior vice president of community outreach at Springboard Nonprofit Consumer Credit Management, a credit-counseling organization.

"In truth, we like the idea of using credit cards frequently for small, manageable expenses," she says. That way, users build a credit history without building big debts.

"It would take a lot of lathes to send someone into credit counseling or bankruptcy court," she says.

Other findings from the survey, conducted by Princeton Survey Research Associates International for CreditCards.com done July 17-20 and July 24-27:

• Overall, 65% of Americans typically pay for purchases under $5 with cash; 22% use debit cards, and 11% use credit cards.

• Cash is the preferred payment method for almost eight in 10 rural card holders, vs. 62% of city dwellers and suburbanites.

• While 70% of Republicans and 69% of Democrats who have major credit cards would rather pay for small purchases with cash, that holds true for only 59% of independents.

• Those who graduated from or attended college are significantly more comfortable than others with using plastic for small purchases: 39%, vs. 16%