The latest data from the Australian Bureau of Statistics and the Reserve Bank of Australia show a continued decline in cash withdrawals and advances, which a MasterCard analysis has described as “almost terminal”.

Credit cards are also getting easier to use, with providers like Commonwealth Bank, ANZ, Westpac and GE Money offering contactless payment options from Visa and MasterCard.

So does that mean cold, hard cash is leaving our wallets in place of more and more cards? Here we look at signs that may indicate s shift from cash to card and what kind of impact it could have on the way we see money.

Credit Card Statistics

Official statistics are regularly released from government bodies and analysed by the industry, but it can take a while to actually make sense of the data. The MasterCard Papers series does help put things into perspective however.

In June, this report showed two key trends that may signal a slowing down of cash use:

1. A decrease in cash withdrawals on debit and credit cards; and
2. An increase in spending on debit and credit cards

Specifically, the average amount of money withdrawn per account from April 2010 to April 2011 was just $731 and growth in cash advance value fell over 4%. In contrast, spending on cards increased 6%, with the overall value of purchases increasing to $232 billion for the same period of time.

These trends seem to indicate a shift in lifestyle preferences, but it also does not prove cash has left the building just yet.

Credit Cards Vs. Cash

While cash may not be the most convenient method of payment anymore, there are some things that could change as it gets used less and less.

One of the most important for credit card holders is financial management. When you spend cash, there is a physical reminder of how much a purchase has cost and how much you have leftover, but with credit there is only the statement or a receipt if it is requested.

For people opting to ditch cash in favour of card, there is also a need to create or maintain some form of financial management. Whether it means regularly checking statements, creating budgets or following shopping lists, keeping track of spending will help keep on top of debt.

At the end of the day, the chances of cash disappearing altogether are still pretty slim. But for those people already favouring the convenience of credit cards, considering features like interest rates and annual fees will help make the switch smart and save some money.