Gen Z Leans on Credit Card Rewards
A new consumer survey by Credit Karma, the digital personal finance and credit service, has found a rise in younger demographics using credit card rewards to help maximize their spending. The study, conducted by Qualtrics on behalf of Intuit Credit Karma, surveyed more than 1,000 people over the age of 18 and found that more than half of Generation Z credit card holders rely on points and rewards to pay for travel expenses.
Eighty-nine percent of Generation Z have at least one credit card, with 75 percent of them holding a rewards credit card in their wallet. Furthermore, 43 percent of people polled said that they see it as a status symbol — with 59 percent of Gen Z noting that they pay an annual credit card fee of as much as $300.
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Notably, a recent report from the Federal Reserve Bank of New York found that American credit card debt balance is sitting at a record high of $1 trillion. Furthermore, Gen Z is noted to be accruing debt at a faster rate than any previous generation. In comparison, an earlier report found that Millenials “fear debt more than dying.”
Credit Karma noted in its 2023 April to June “State of Debt and Credit Report” that Gen Z had approximately 4 percent average change in credit card debt versus Millenials had approximately 2 percent average change in credit card debt.
Despite this, Gen Z is using credit cards to get points and rewards — specifically for travel. Credit Karma’s consumer financial advocate Courtney Alev notes Gen Z isn’t letting their credit card rewards go to waste.
“The rewards [Gen Z] earned on their spending fueled summer travel for many, and others are relying on these rewards to get them through the upcoming holiday season and future travel,” said Alev. “Gen Z is turning to social media to help with their finances. Almost a third of Gen Z said they learn about rewards credit cards on TikTok, more than any generation. And they are learning ‘hacks’ to maximize the benefits of their rewards cards.”
More than half of Gen Z said they rely on credit card points to help pay for travel expenses. The survey found that 55 percent of Gen Z said that rewards and points are a top priority when signing up for a credit card — with 68 percent of the demographic even switching cards if another company and card offered better rewards such as airline miles, sign-up bonus or cash back.
According to Credit Karma’s survey, 56 percent of Gen Z said that they were able to travel this summer because of the points and rewards earned through their credit cards. Furthermore, 45 percent of Gen Z polled reported that they will continue to rely on their rewards points to help fund the upcoming holiday travel season — with 35 percent of people noting they won’t be able to travel in the next year without using points and rewards.
“Rewards cards are a great way to accumulate points for certain purchases like travel or hotel accommodations,” continued Alev. “As many goods and experiences are getting more expensive, these rewards can help offset the costs, and Gen Z sees that.”
However, Alev said that if Gen Z is not able to pay their credit card bills in full and on time, it comes at the cost of interest accrued and fees — which outweighs the benefits of the rewards accumulated.
As for what this means for retailers and brands? Alev said that with the current economic climate, there’s a clear appetite for rewards beyond credit cards with Gen Z more likely to “gravitate towards retailers that offer the most appealing ways to redeem rewards.”
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