Rising Use of Amex Cards Shows Credit Appeals to Savvy Younger Consumers

Younger consumers — Gen Z and millennials among them — boosted American Express’ results, as disclosed on Friday (July 21).

But beyond the confines of an earnings report, the continued embrace of the cards out in the field in a landscape where 73% of millennials live paycheck to paycheck, as PYMNTS’ research has estimated, shows that credit is being used judiciously by those shoppers.

First thing’s first: 

We’ve found that millennials have grown their savings through the past several months, which in itself gives at least some leeway toward managing debt. 

In March 2023, millennials reported an average savings of $11,000, compared to $7,300 in March 2022. And as to the sources of those savings — and the ability to spend: 79% percent of millennials earn more than 50% of their household’s income, while 20% earn all of their household’s income.

Spend Management — Day In and Day Out 

And as we found separately, credit has been a staple of managing day-to-day financial life. PYMNTS’ data shows that millennial and Gen Z consumers are the most likely to have increased their use of credit products in the last year. 

Drilling down a bit, more than half of Gen Z consumers cite better spend management as the main reason for using credit products. And 42% of millennials increased their use of credit products for everyday purchases in the last year. 

The chart below shows that a vast majority of younger consumers have been using credit to help with cash flow — and millennials, at more than 85%, top the list.

Some 44% of millennials reported using credit “significantly more” than they had done in the past, followed by more than a third of Gen Z consumers — the highest tallies across all generations we studied.

Amex’s data offer a crystallization of these trends. As the company noted on Friday, spending on the part of these younger card customers was up by 21% in the most recent quarter. 

And during the conference call with analysts, it was revealed that 60% of new accounts come from those cohorts. Connecting some data dots, commentary from the call also noted that only about 8% of loan receivables are coming from consumers with FICO scores below 660.  

Suppose a significant percentage of spending comes from millennials and Gen Z. In that case, most of the loan book is tied to higher FICO borrowers, and spending is accelerating. It follows that these younger denizens are attractive borrowers to which credit can be extended. 

 Amex’s results show that loans and receivables write-off in delinquency rates remain below pre-pandemic levels. Delinquency rates remained flat quarter over quarter, per the call, and should remain below pre-pandemic levels this year.

Youth belongs to the young, goes the saying — as does credit card spending, at least for now.