Younger Consumers Less Likely to Use Credit Cards

The younger the consumer, the less likely they are to use credit cards.

Only 42% of Generation Z consumers and 62% of millennials said they used a credit card in the last 90 days, according to “The Credit Economy: How Younger Consumers Make Credit Decisions,” a PYMNTS and i2c collaboration.

Those percentages are higher among the older generations, with 71% of Generation Xers and 74% of baby boomers and seniors saying they used a credit card during the same period of time, according to the report.

The younger generations have been disciplined about the way they engage with credit, i2c President Jacqueline White told PYMNTS in an interview posted in October.

“Gen Z and millennials, about 26% of them say that they prefer not to use credit,” White said. “About 29% believe it’s easier to track spending if they don’t use credit.”

While most millennials already have well-established credit limits, members of Gen Z are still working on their credit scores to gain higher credit limits, Inter & Co. Chief Operating Officer Ray Chalub told PYMNTS during that same panel discussion.

“We also see that they are afraid to overspend on a credit card,” Chalub said.

When they do need to use credit, younger generations are more likely than older ones to deploy a buy now, pay later (BNPL) option, PYMNTS Intelligence found.

In the 90 days before being surveyed, 14% of Gen Z consumers and 20% of millennials used BNPL, according to the report.

In comparison, 14% of Gen Xers and 6% of baby boomers and seniors had used BNPL, per the report.

“[The younger generations] are cautious about accumulating high-interest debt,” White said. “They’re drawn to buy now, pay later because it lets them think through, ‘I’m going to spend this amount of money, I’m going to pay it over these four payments or these six payments,’ and it allows them to fold it into their budget as opposed to this idea of accumulating debt.”

In the daily lives of consumers, big-ticket items are an obvious choice for the usage of BNPL, but small purchases are also being made with that payment method, Chalub said.

“So, it’s going to be a very interesting scenario for the next couple of years,” Chalub said.