Study: Generational Credit Card Habits
KEY POINTS
- Generational preferences differ: Younger generations prioritize low interest rates, while older generations value no annual fees and rewards.
- Deal breakers vary: High interest rates deter Gen Z and millennials, whereas annual fees disqualify cards for older generations.
- Building credit vs. rewards: Gen Z and millennials seek credit cards to build credit, while older generations focus on maximizing rewards.
What consumers are looking for out of their credit card goes a long way in determining what kind of card or cards they hold in their wallets -- and different generations have different needs from their cards.
Motley Fool Money surveyed 2,000 Americans on their credit card habits and preferences and found a number of differences among generations, as well as some similarities.
For example, younger generations place more value on a card with low interest rates than no annual fees, while baby boomers are more likely to consider no annual fees as the most important credit card feature.
Baby boomers are also less likely to look for a new card in a bid to build their credit score. Instead their top priority is to optimize rewards. For younger generations, rewards take a back seat to building credit when they're shopping for a new credit card.
For a deep dive into generational credit card habits, read on.
Gen Z splits from millennials, Gen X, and baby boomers on most important credit card features
The most important credit card feature for baby boomers, Gen X, and millennial respondents is no annual fee. For Gen Z, it's a low interest rate, followed by no annual fee.
Across all generations, the third-most important credit card feature is a rewards program.
Across all respondents, the order of credit card features by percentage of respondents was unchanged from 2023.
For Gen Z and millennials, the percentage selecting rewards over a high credit limit increased.
Remaining least important are welcome offers and bonuses, wide acceptance of the card issuer, the reputation of the card issuer, and insurance or other protections provided through the card.
| What Is the Top Feature You Look for in a Credit Card? | Gen Z | Millennials | Gen X | Baby Boomers | All Respondents |
|---|---|---|---|---|---|
| No annual fees | 19% | 30% | 37% | 50% | 36% |
| Low interest rate | 38% | 26% | 28% | 18% | 26% |
| Rewards program | 18% | 22% | 20% | 23% | 21% |
| High credit limit | 13% | 12% | 5% | 3% | 7% |
| Introductory offer/welcome bonus | 3% | 3% | 5% | 3% | 4% |
| Widely accepted card issuer | 4% | 4% | 2% | 1% | 3% |
| Recognized/reputable card issuer | 3% | 3% | 2% | 2% | 3% |
| Insurance or other protections offered through the card | 1% | 1% | 1% | 1% | 1% |
Those preferences track with features that are deal breakers when shopping for a new credit card.
For 52% of baby boomers and 44% of Gen X respondents, an annual fee disqualifies a card from consideration. The top disqualifier for Gen Z and millennials is a high interest rate. The two most frequently cited credit card deal breakers across all generations are an annual fee and a high interest rate.
Overall, disqualifying factors are in the same order as 2023. A higher percentage of respondents, particularly older generations, view an annual fee as disqualifying.
| What Immediately Disqualifies a Credit Card From Your Consideration? | Gen Z | Millennials | Gen X | Baby Boomers | All Respondents |
|---|---|---|---|---|---|
| An annual fee | 23% | 32% | 44% | 52% | 40% |
| High interest rate | 48% | 34% | 27% | 29% | 32% |
| Requirement for a high credit score | 16% | 19% | 14% | 5% | 13% |
| Non-competitive rewards/cash back program | 7% | 11% | 12% | 11% | 11% |
| No or non-competitive introductory offer | 7% | 3% | 3% | 2% | 3% |
This may suggest that baby boomers are more confident in their ability to pay off their credit card every month and view an annual fee as the main cost associated with using a credit card.
It's surprising that Gen X respondents don't consider interest rates to be a higher priority given that they carry over $2,000 more in credit card debt on average than any other generation.
No annual fee cards may also be easier for baby boomers to obtain. The best no annual fee credit cards usually require a good credit score, and the average credit score for baby boomers is well above that.
The best low interest credit cards may be a better fit for some younger generations who are not in their prime earning years and anticipate putting purchases on their card they cannot pay off in a single billing cycle.
Younger generations look for new credit cards to build credit; older generations look for rewards
The most cited reason Gen Z and millennials respondents looked for their last new credit card was to build their credit, while the motivation most cited among Gen X and baby boomers was to earn more points or optimize rewards.
| What Prompted You to Search for Your Last New Credit Card? | Gen Z | Millennials | Gen X | Baby Boomers | All Respondents |
|---|---|---|---|---|---|
| Points/rewards total | 23% | 29% | 31% | 40% | 32% |
| To build credit | 57% | 41% | 25% | 13% | 30% |
| To earn more cash back/points | 19% | 16% | 18% | 23% | 19% |
| To have more available credit | 13% | 17% | 18% | 17% | 16% |
| To optimize rewards | 4% | 13% | 13% | 17% | 13% |
| To take advantage of a sign up bonus | 3% | 6% | 11% | 13% | 10% |
| To take advantage of a 0% APR intro offer | 1% | 5% | 10% | 13% | 8% |
| To transfer an existing credit card balance | 2% | 3% | 5% | 4% | 4% |
Here are the percentages of each generation that cited a reason dealing with rewards or cash back as their primary motivator:
- Gen Z: 23%
- Millennials: 29%
- Gen X: 31%
- Baby boomers: 40%
- All respondents: 32%
On average, younger generations have lower credit scores than older generations, which tracks with younger respondents being more likely to cite the desire to build their credit history as the reason for their most recent credit card search.
Having a credit card with a healthy credit utilization ratio and making payments on time are important factors credit bureaus consider when calculating credit scores.
That said, younger generations should be wary of opening multiple credit cards at once. Each new credit card application comes with a hard credit check, which can decrease your credit score.
Cash back cards are the most popular type of credit card across generations
Cash back cards remain the most common type of credit card across all generations. As in previous years, older generations are more likely than Gen Z to also own a rewards card, like one that provides points for shopping at specific stores or awards airline miles.
| What Types of Credit Cards Do You Have? | Gen Z | Millennials | Gen X | Baby Boomers | All Respondents |
|---|---|---|---|---|---|
| Cash back credit card | 58% | 61% | 61% | 66% | 62% |
| Rewards credit card | 34% | 50% | 56% | 61% | 53% |
| Store credit card | 14% | 18% | 26% | 25% | 22% |
| Travel credit card | 12% | 16% | 15% | 17% | 15% |
| Secured credit card | 17% | 22% | 13% | 6% | 14% |
| Cobranded credit card | 3% | 5% | 11% | 12% | 8% |
| Business credit card | 8% | 6% | 6% | 3% | 5% |
| Student credit card | 15% | 2% | 1% | 0% | 3% |
The popularity of cash back cards may lie in their variety. Some of the best cash back credit cards offer a flat percentage back for all purchases, while others feature more cash back for specific types of purchases.
Baby boomers use their credit cards for more spending than other generations
Consistent with Motley Fool Money's 2023 Generational Credit Card Habits Survey, baby boomers put more of their spending on their credit cards. The percentage of purchases made with credit cards increases with age, which is also consistent with data from 2023.
| What Percentage of the Purchases You Make in an Average Month Is Placed on a Credit Card? | Gen Z | Millennials | Gen X | Baby Boomers | All Respondents |
|---|---|---|---|---|---|
| 50% or less | 84% | 75% | 66% | 57% | 68% |
| Over 50% | 14% | 25% | 33% | 43% | 32% |
Data from Experian tracks with those findings: Gen Z and millennials carry lower credit card balances than Gen X and baby boomers, although it does show that Gen Xers on average carry more on their credit cards than baby boomers. Still, Gen X spends more than any other generation, so they may carry a higher credit card balance while putting a lower percentage of their spending on their credit cards.
Statistics from Experian also suggest that younger generations have lower credit limits due to their short credit history, which could influence how much of their overall spending they put on their credit cards.
Gen Z and millennials are more likely than other generations to track credit card spending
Eighty-two percent of Gen Z and 78% of millennial respondents claim to track their credit card use throughout the month, compared to 73% of Gen X and 70% of baby boomers.
That's nearly consistent with the 2023 survey results. In 2024, slightly more Gen Zers and slightly fewer millennials said they tracked their credit card spending. Overall, the percentage of respondents that track their spending is level year over year.
| Do You Track Your Credit Card Spending/Credit Usage Throughout the Month? | Gen Z | Millennials | Gen X | Baby Boomers | All Respondents |
|---|---|---|---|---|---|
| Yes | 82% | 78% | 73% | 70% | 75% |
| No | 18% | 22% | 27% | 30% | 25% |
Tracking credit card spending is important even if you know you can cover your credit limit at the end of your billing cycle. Credit bureaus can lower your credit score if you carry a high credit utilization ratio, which is the total credit card balance divided by total credit limit. Keeping your credit utilization ratio below 30% is generally recommended.
14% of respondents pay off their entire credit card balance each month
Fewer than 20% of respondents in each generation opt to pay their entire credit card balance every month, with Gen Z and baby boomers being slightly more likely than others to do so.
A higher percentage of millennials and Gen X respondents make the minimum required payment than pay their entire balance each month. It's most common for each generation to pay their statement balance each month.
Notably, about a quarter of respondents across all generations said how much they pay depends on their spending that month. Still, it's always a good idea to pay the statement balance or at least more than the minimum payment.
Compared to 2023, Gen X shows more signs of flexibility in how they pay off their credit card. Thirty-two percent say how much the pay depends on their spending that month compared to 25% in 2023.
| How Do You Usually Pay Your Credit Card Bill? | Gen Z | Millennials | Gen X | Baby Boomers | All Respondents |
|---|---|---|---|---|---|
| I pay the statement balance every month | 36% | 39% | 41% | 52% | 43% |
| How much I pay depends on my spending that month | 27% | 21% | 32% | 24% | 26% |
| I pay the minimum balance every month | 18% | 25% | 15% | 10% | 17% |
| I pay the entire balance every month | 19% | 16% | 11% | 14% | 14% |
Making the minimum payment will prevent you from being hit with late fees or other penalties, but interest will accrue on the outstanding balance.
Paying the statement balance prevents interest from being generated, but may not reduce your credit card balance to zero if you've used it after the end of the billing cycle you've just paid off.
Paying off the entire balance will bring your credit card balance to zero.
All generations prefer letting credit card rewards build over redeeming them
Roughly 50% of respondents across all generations opt to let their credit card rewards accrue for as long as possible before redeeming them.
About a quarter of respondents, aside from Gen Z, like to redeem their rewards as soon as possible. Just 16% of Gen Z say they use their credit card rewards as soon as they can. Around over 10% say they don't use their rewards, leaving valuable free cash on the table.
Those findings are largely consistent with survey results from 2023.
| Which of the Following Best Describes How You Redeem Your Credit Card Rewards? | Gen Z | Millennials | Gen X | Baby Boomers | All Respondents |
|---|---|---|---|---|---|
| I let my rewards accrue for as long as possible | 53% | 51% | 52% | 53% | 53% |
| I redeem my rewards as soon as possible | 16% | 23% | 24% | 28% | 23% |
| I redeem my rewards only for large expenses | 18% | 16% | 14% | 12% | 15% |
| I don't use my credit card rewards | 12% | 10% | 9% | 7% | 9% |
Depending on the type of card and rewards, there's a chance that some rewards come with an expiration date, so make sure to keep track of all offers you receive.
Over 50% put rewards towards their credit card balance
The most common use of credit card rewards across all generations is to pay down credit card balances. That approach is taken by 55% of all respondents and over 50% of each generation.
Redeeming rewards through their credit card rewards program was the second-most common use, selected by roughly a third of respondents across generations, with millennials standing out at 39%.
Gen Z respondents are more interested in transferring points to travel partners.
| Which of the Following Ways Do You Redeem Your Credit Card Rewards? | Gen Z | Millennials | Gen X | Baby Boomers | All Respondents |
|---|---|---|---|---|---|
| I redeem my rewards to pay off my balance | 55% | 51% | 58% | 57% | 55% |
| I transfer rewards to travel partners | 13% | 10% | 7% | 9% | 9% |
| I redeem my rewards within the app's portal | 32% | 39% | 35% | 34% | 36% |
Gen Z and millennials are more conscious of credit card judgment than older generations
Fifty-nine percent of Gen Z respondents and 49% of millennials feel judged at least on rare occasions when they use their credit card in front of others. That's a much higher rate than Gen X (39%) and baby boomers (22%).
Looking more closely at Gen Z:
- 6% of millennial respondents said they always think of how others judge their card
- 29% said they consider it sometimes
- 24% said they think about it rarely
- Just 40%, the lowest of any generation, said they never think about how others judge their credit card choice
Baby boomers, on the other hand, care the least about what others think of their credit card choice.
- 78% of baby boomer respondents said they never consider what others might think when they flash their card
- 11% said they rarely think about it
- 8% said they sometimes think about it
- Just 3% said they always consider how their credit card choice is judged by others
| When Dining Out or Shopping, How Often Do You Consider What Others Might Think of Your Credit Card Choice? | Gen Z | Millennials | Gen X | Baby Boomers | All Respondents |
|---|---|---|---|---|---|
| Never | 40% | 51% | 64% | 78% | 61% |
| Sometimes | 29% | 25% | 13% | 8% | 17% |
| Rarely | 24% | 19% | 17% | 11% | 17% |
| Always | 6% | 5% | 6% | 3% | 5% |
Compared to Motley Fool Money's 2023 Generational Credit Card Habits Survey, a higher percentage of respondents don't think of how others judge their credit cards. Younger generations remain more conscious of credit card judgement than older generations.
It's easy to be impressed by the clang and heft when someone throws down a glossy titanium card, but looks aren't everything. Many of the best credit cards are made of good, old-fashioned plastic, and they rake in rewards, have low or no annual fees, and may come with other perks -- even if they're not made of metal.
That said, there are some great metal credit cards, including some that net travel, cash back, and hotel rewards. However, many of these cards come with relatively high annual fees, so you have to pay for some of that extravagance.
-
Methodology
On Nov. 1, 2024, Motley Fool Money surveyed 2,000 adult Americans. The survey was distributed via Pollfish. Results were post-stratified to generate nationally representative data based on age and gender. Pollfish employs organic random device engagement sampling, a method that recruits respondents through a randomized invitation process across various digital platforms. This technique helps to minimize selection bias and ensure a diverse participant pool.
Our Research Expert
Jack Caporal is the Research Director for The Motley Fool and Motley Fool Money.
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. Motley Fool Money does not cover all offers on the market. Motley Fool Money is 100% owned and operated by The Motley Fool. Our knowledgeable team of personal finance editors and analysts are employed by The Motley Fool and held to the same set of publishing standards and editorial integrity while maintaining professional separation from the analysts and editors on other Motley Fool brands. Terms may apply to offers listed on this page.