How Gen Z, Millennials, Gen X, and Baby Boomers Use Credit Cards


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Every generation has a different relationship with money. Those differences extend to their credit card habits and preferences.

To find out more about how different generations use their credit cards, we asked members of Generation Z (ages 18–24 in 2021), Millennials (25–40), Gen Xers (41–56), and Baby Boomers (57–75) about their habits and preferences around cards.

Here’s what 2,000 American credit card users had to say.

(Editor’s note: This piece doesn’t cover average credit card debt — for that information, see our credit card debt statistics research.)

Key findings

  • 45% of consumers prefer using credit cards to make their purchases, making this the most common way to pay. That figure is up from 36% in 2019.
  • Debit cards made up 58% of people’s payment preferences in 2019, but fell to 42% in 2021.
  • Cash back credit cards are still the most popular type of credit card, with 46% of American cardholders having one. But that’s down from nearly 60% in 2019.
  • Travel credit cards have gotten more popular in spite of the COVID-19 pandemic.
  • 41% of Millennials and 52% of Baby Boomers have no-annual-fee credit cards, significantly more than other generations.
  • American credit card users have an average of 3 credit cards, with Generation Z cardholders seeing the lowest ownership rates with an average of 2.
  • 45% of respondents had used a balance transfer, up from 38% in 2019, potentially indicating debt problems from COVID-19.
  • A quarter of American credit card owners say that a low interest rate is the most important feature in a card. Both a good rewards program and no annual fee came close with 22% each.
  • 63% of Generation Z cardholders say that mobile phone insurance is important, significantly more than any other generation.
  • When it comes to applying for a card, consumers are most worried about choosing the right credit card offer, with 25% listing that as their chief concern.
  • Over half (55%) of American credit card users have maxed out at least one credit card.

Most Americans prefer to pay with credit cards over debit or cash

We asked American credit card owners how they prefer to make most of their payments. Here’s the percentage that said credit cards, debit cards, and cash:

  1. Credit card: 45.25%
  2. Debit card: 42.45%
  3. Cash: 12.30%

Nearly half of our respondents (45.25%) primarily used credit cards to pay for purchases. This was a significant increase from the 35.7% of consumers who preferred credit cards in our 2019 survey on credit card habits.

Cash also got about 80% more popular, as it was the method of choice for just 6.8% of consumers in 2019 — this year’s 12.30% was a big jump.

The increase in popularity of paying with credit cards and cash mean that debit cards saw a notable drop from 57.5% in 2019 to 42.45% in 2021.

Most Americans pay at least their statement balance every month

60.85% of consumers said they paid their full or statement balance every month.

That’s a massive improvement from our 2019 survey, when 66% of consumers said they carried a balance from month to month.

It’s not all good news, though. 17.25% of American credit card users said they usually pay the minimum balance on their credit card bill. Making a credit card’s minimum payment isn’t recommended because of how long it takes to pay off your balance and the interest you’ll incur during that time.

With so many different types of credit cards available, there’s no shortage of options. Cash back credit cards come out on top, as 46.4% of American credit card users have at least one.

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Cash back cards may not hold onto that lead for long, though. When we ran this survey in 2019, nearly 60% of respondents had a cash back card, so they’ve suffered a drop in popularity.

Type

Generation Z

Millennials

Generation X

Baby Boomers

Overall average

Cash back

37.76%

51.90%

40.68%

46.51%

46.40%

No annual fee

25.00%

41.14%

33.76%

51.63%

38.50%

Retail/store-specific

17.35%

33.54%

30.55%

38.14%

31.40%

Low interest

18.37%

25.53%

26.69%

25.58%

25.20%

Airline/travel

10.20%

20.15%

22.03%

14.42%

19.15%

Balance transfer

18.88%

16.77%

21.70%

10.23%

17.85%

Data source: The Ascent survey of 2,000 American adults who own credit cards, conducted January 25, 2021.

Even though COVID-19 did a number on travel, it doesn’t appear to have hurt the popularity of travel rewards credit cards, which jumped in popularity between 2019 and 2021.

We saw an even bigger jump among balance transfer cards. In 2019, 12.40% of respondents had a balance transfer card. In 2021, that number rose to 17.85%

Average number of credit cards per American cardholder: 3

The average number of credit cards among American credit card users in 2021 is 2.7. Over three quarters of card-holding Americans have one, two, or three credit cards. (Experian data shows that about 95% of American adults have at least one card account open in their name.)

Generation

Average number of credit cards owned by cardholders

Generation Z

2.2

Millennials

2.7

Generation X

2.7

Baby Boomers

2.9

Overall average

2.7

Data source: The Ascent survey of 2,000 American adults who own credit cards, conducted January 25, 2021.

Generation Z doesn’t have quite as many cards as other generations (2.2), but this group is much younger than the rest. Some members of Generation Z are just reaching adulthood, and the oldest are only 24.

Although most consumers have three credit cards or fewer, there are exceptions. About one in seven American credit card users (14.15%) have five or more credit cards.

We also looked at the average number of credit cards by gender and found that female cardholders (2.8) have more credit cards on average than men (2.5).

Women are also much more likely to have a large number of credit cards. Nearly twice as many women (10.11%) have six or more credit cards compared to men (5.78%).

Balance transfers are up in 2021

45% of American credit card users have used a balance transfer to consolidate debt. That’s 7% more than in 2019, when 38% of respondents had used one.

This may indicate that more consumers have been dealing with debt problems, potentially due to the economic impact of COVID-19.

Generation

Percentage who have used a balance transfer

Generation Z

39.80%

Millennials

38.40%

Generation X

57.90%

Baby Boomers

38.10%

Overall average

44.50%

Data source: The Ascent survey of 2,000 American adults who own credit cards, conducted January 25, 2021.

The number of adults in Generation Z who have used a balance transfer is especially high considering their age. It’s a worrisome sign that nearly 40% of the youngest card-holding adults have had to refinance credit card debt.

What consumers want in a credit card: low interest rates and credit perks

Consumers shop around for new credit cards often. Nearly three out of four of our card-holding respondents (72.60%) had searched for a credit card within the last year. Over half (54.50%) had done so within the last six months.

We asked several questions to find out what respondents want when looking for a credit card.

When consumers had to pick a number-one feature they wanted ahead of anything else, they had a few overwhelming favorites:

  1. Low interest rate: 25.51%
  2. A good rewards program: 22.20%
  3. No annual fee: 22.00%
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The importance of features was fairly consistent across generations, with a couple notable exceptions that we’ll discuss below:

Feature

Generation Z

Millennials

Generation X

Baby Boomers

Overall average

Low interest rate

22.56%

25.56%

25.36%

28.37%

25.51%

A good rewards program

18.97%

25.03%

21.49%

15.81%

22.20%

No annual fees

28.21%

20.25%

18.74%

32.56%

22.00%

High credit limit

8.72%

7.74%

8.89%

2.79%

7.58%

Introductory offer / welcome bonus

3.59%

6.68%

8.24%

5.12%

6.73%

Widely accepted card issuer

6.15%

5.83%

6.30%

6.98%

6.13%

A recognized card issuer

3.59%

4.98%

6.14%

4.19%

5.12%

Insurances or protections offered

6.15%

3.08%

4.36%

2.33%

3.77%

Other

2.05%

0.85%

0.48%

1.86%

0.95%

Data source: The Ascent survey of 2,000 American adults who own credit cards, conducted January 25, 2021.

Millennials and, to a lesser extent, Generation X are more rewards-focused than other generations. 25.03% of Millennials said that a good rewards program was their top priority in a credit card, and 21.49% of Gen Xers said the same.

They were also ahead of other generations when it comes to looking for a good introductory offer or welcome bonus, with 6.68% of Millennials and 8.24% of Gen Xers prioritizing this useful feature.

Baby Boomers and Generation Z have something in common — they both prefer no-annual-fee credit cards — though more Baby Boomers (32.56%) than members of Generation Z (28.21%) said this was their top priority.

Generation Z is also big on credit card insurance and protections, with 6.15% saying this was their top priority. Other generations averaged 2–4%.

Here were the most popular credit card perks and the percentage of consumers who rated them as somewhat or very important:

  1. Credit perks (fraud protection, credit monitoring): 85.15%
  2. Purchase protections (extended warranty coverage, return protection): 76.95%
  3. Retail store discounts: 74.15%
  4. Travel protections (lost luggage reimbursement, trip cancellation insurance): 69.25%
  5. Automobile perks (car rental insurance, roadside assistance): 66.95%
  6. Air travel perks (free checked luggage, companion ticket, airport lounge access): 65.25%
  7. Mobile phone insurance: 52.70%
  8. Concierge services: 48.05%

For the most part, the way features were ranked didn’t vary much by generation. Generation Z was much more likely to value mobile phone insurance, though, as 63.27% considered this perk important.

Why consumers open credit cards: building credit

In response to what prompted them to search for their last credit card, consumers gave a diverse mix of answers:

  1. Build credit: 25.70%
  2. Earn cash back/points: 15.10%
  3. Have more available credit: 12.90%
  4. Optimize rewards: 10.00%
  5. Take advantage of a sign-up bonus: 9.90%
  6. Balance transfer: 8.75%
  7. Take advantage of a 0% intro APR: 8.55%
  8. Apply for first credit card: 7.65%

It’s no surprise that younger respondents were much more likely to choose building credit or applying for a first credit card. This was especially noticeable with Generation Z, where 38.97% said they last searched for a card to build credit.

Biggest credit card application concern: choosing the best credit card offer

Here’s what 2,000 American credit card owners said were their greatest worries when applying for a new credit card:

  1. Choosing the best credit card offer: 24.65%
  2. Credit card application affecting credit: 21.95%
  3. Credit card fraud or scams: 18.95%
  4. Rejected application: 12.15%
  5. Limited credit cards available due to credit score: 11.50%
  6. Biased online credit card review sites: 8.40%

It’s worth noting that credit card applications don’t affect your credit score all that much. Credit card applications usually require the bank to run a hard credit inquiry, but the typical consumer’s FICO® Score (the most widely used type of credit score) will drop less than five points, which isn’t much.

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Concern

Generation Z

Millennials

Generation X

Baby Boomers

Overall average

Choosing the best credit card offer

20.41%

24.47%

24.92%

26.98%

24.65%

Credit card application affecting credit

12.76%

24.16%

22.83%

18.60%

21.95%

Credit card fraud or scams

27.55%

16.88%

16.40%

26.05%

18.95%

Rejected application

11.73%

12.45%

11.90%

12.56%

12.15%

Limited credit cards available due to credit score

11.73%

10.76%

14.31%

7.44%

11.50%

Biased online credit card review sites

12.76%

8.65%

8.20%

4.65%

8.40%

Other

2.55%

0.95%

0.16%

0.47%

0.80%

Data source: The Ascent survey of 2,000 American adults who own credit cards, conducted January 25, 2021.

There are once again some commonalities between Baby Boomers and Generation Z. Both were less likely to worry about how credit card applications would affect their credit (12.76% of Gen Z and 18.60% of Baby Boomers) and more likely to worry about credit card fraud and scams (27.55% and 26.05%, respectively). With Generation X and Millennials, it was the opposite.

Biggest dealbreaker on credit card applications: high interest rate

We asked consumers what would instantly disqualify a credit card from their consideration. Here’s what they said (respondents were allowed to choose more than one dealbreaker):

  1. High interest rate: 51.40%
  2. Annual fee: 46.85%
  3. Poor rewards/cash back: 31.15%
  4. Requires high credit score: 24.80%
  5. No/low introductory offer: 16.65%

Older respondents were more likely to rule out credit cards with high interest rates, as the percentage who called this a dealbreaker increased in each generation. The opposite was true of a high required credit score, which trended down as respondents aged:

55% of American credit card users have maxed out at least one card

A credit card is maxed out when the balance is equal to the credit limit. At that point, you can’t use the card unless you’ve agreed to allow purchases that push you over the limit (and to pay an over-the-limit fee).

According to our study, 54.80% of respondents had maxed out at least one credit card. That’s on the high side, since maxing out credit cards is something to avoid whenever possible.

Generation

Percentage who have maxed out at least one credit card

Generation Z

43.88%

Millennials

51.48%

Generation X

66.24%

Baby Boomers

48.37%

Overall average

54.80%

Data source: The Ascent survey of 2,000 American adults who own credit cards, conducted January 25, 2021.

More credit savvy consumers

There’s plenty of promising data on American credit card habits. The fact that over 60% of American cardholders pay their credit card bill in full every month and avoid debt is fantastic. Consumers also seem to understand the importance of building credit and taking advantage of the benefits that credit cards offer.

It’s not all good news, though. 55% of American credit card users have maxed out a credit card. 45% have also needed to use balance transfer offers, including an alarmingly high number of young adults in Generation Z (39.8%).

To be fair, those issues could be at least in part due to the pandemic. Overall, it appears that Americans’ credit knowledge and habits are trending in the right direction.

Methodology

The Ascent distributed this survey to 2,000 American adults who own a credit card via Pollfish on January 25, 2021.

Respondents were 56% female and 44% male. Age breakdown was approximately 10% 18–24, 26% 25–34, 37% 35–44, 14% 45–54, and 14% 55+.

Some figures may not total to 100% due to rounding.


View more information: https://www.fool.com/the-ascent/research/how-gen-z-millennials-gen-x-baby-boomers-use-credit-cards/

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