How Does Gen Z Use Credit Cards?

Introduction

Each generation generally views credit cards in its own way, with preferences shaped by age, experiences, and financial situations. Baby boomers are different from Generation X, who are different from millennials and Generation Z.

Born between 1997 and 2012, members of Gen Z — also called Zoomers, post-millennials, or the iGeneration — are still on the younger side. But that doesn’t mean they’re not old enough to have developed their own credit card opinions, needs, and habits.

In 2024, while the youngest Gen Z may be 12 years old, the oldest is 27 years old.  Members of Generation Z who are old enough to apply for a credit card (at least 18 years old) are more likely than older consumers to choose a card that offers an attractive design or supports causes they believe in. And because of their relatively young age, more of them have student credit cards.

But the topic is more complicated than that. Let’s take a closer look at some of the key points and money trends setting Gen Z apart from other generations.

Gen Z’s Relationship With Credit Cards

Age has an impact on Gen Z’s relationship with credit cards. One place you’ll see that play out is in their reasoning for opening credit cards in the first place. When asked what prompted them to search for their last credit card, 44% of eligible Gen Z respondents said their goal was to build credit.

However, credit eligible members of Generation Z generally tend to be more cautious about using credit cards than older consumers, saying they don’t want to spend money they don’t have. When they do use credit, more than 30% of Gen Z cardholders purchase everyday items like gas and groceries, which is higher than any other generation.

Gen Z Credit Card Debt

The average credit card debt for credit eligible members of Gen Z is typically lower than older consumers. In fact, it’s consistently less than half of what millennials or baby boomers carry, and about a third of Gen X debt. But that’s not necessarily due to better financial habits — it may also point to the fact that younger people with shorter positive credit histories typically get approved for lower credit lines when starting out.

So, let’s compare apples to apples. It turns out that 20-something credit eligible Gen Z consumers have more debt than previous generations did at the same age — in fact, 25% more than millennials did. However, post-pandemic inflation might be the biggest factor here.

Average Number of Credit Cards for Gen Z

While the average number of credit cards per American is three, and older generations typically have four or more, Gen Z doesn’t carry as many — averaging only two credit cards per eligible Gen Zer. One explanation for this is likely the age factor. With Gen Z’s oldest members still being only in their mid-20s, they’ve had much less time to accrue cards than Gen X or baby boomers.

And then we have to consider how the Credit Card Accountability Responsibility and Disclosure Act (or Credit CARD Act) of 2009 has restricted credit card marketing to college students, and made it more difficult to even get a card under the age of 21. Impressively, more older, credit eligible Gen Z cardholders know the interest rates on the cards they do carry than any other generation. So, they’re likely also more selective about what they apply for.

Most Popular Type of Credit Card for Gen Z

There are many different types of credit cards on the market, and a lot of them are rewards credit cards with various structures. But credit eligible Gen Z has a clear preference on which type they prefer: cash back credit cards.

In fact, a whopping 63% of Gen Z cardholders have a card that offers cash back rewards while only 30% have a card that gives travel rewards, according to research from The Motley Fool Ascent. And only a quarter or so chose a sign-up bonus, 0% APR, or balance transfer offer.

Earning rewards and bonuses is clearly important to Gen Z, even if they take other options when necessary — including more than a fifth of the eligible Gen Z population owning either a student card or secured card.

What Gen Z Wants in a Credit Card

So, we know what types of cards they have, and which kind of rewards they prefer, but what features do eligible members of Gen Z look for and prioritize in a credit card? It turns out those rewards programs aren’t as critical to making a decision as a card with a low interest rate or no annual fee, according to an Ascent study on generational credit card habits. Also, low on the importance scale are protections offered, or the credit card company itself — but sign-up bonuses and $0 APR introductory offers are still somewhat influential.

On the flip side, the requirement for a high credit score is a top disqualifier for more credit eligible members of Gen Z than any other generation. And that makes sense, since the average credit score for younger people is generally lower than their older counterparts due to less time spent building credit histories.

Bottom Line

While each individual is different, the overall opinions and financial habits — shaped by life experiences, finances, and economic factors — vary from one generation to the next. And Gen Z fits the same tried-and-true pattern.

Being relatively new to the game, credit eligible Gen Z tends to prioritize building credit as opposed to things like travel rewards. It’s likely that as they get older and more established, their financial priorities could change — and they may take more advantage of other credit card features available on the market.

Of course, perks and credit-building tools aren’t mutually exclusive. It’s possible to get the best of both worlds. So if you’re looking to build or rebuild credit while also taking advantage of excellent rewards and other benefits, see if you pre-qualify for a card from Credit One Bank.