United States (English)Credit cards are so much more just pieces of plastic with numbers, rates, and balances. They can powerful personal finance tools that shape how we manage our money every single day. Whether it's earning rewards, building credit, or making ends meet, credit cards are at the center of many Americans' personal finances.
Americans use credit cards to earn rewards, build credit, or help make ends meet.
Credit Card Usage Trends Among Americans
Credit cards are everywhere. Seven in ten Americans have rewards, points, or cashback cards. It doesn't matter age or background, these plastic companions are a staple in the wallets of many Americans.
Younger Americans and Credit Card Dependency
Young people, in particular, are leaning on credit cards to get by.
"Younger Americans are facing a confusing (and sometimes, challenging) short-term economic environment, and responding with skepticism about the long term," says Jason Brown, president and chief client officer atIpsos.
With interest rates climbing, this dependency is hitting harder.
Motivations Behind Credit Card Usage
Why do different age groups use credit cards? Younger folks are focused on building their credit history, but there's a big difference in how they manage their balances. Over two-thirds (69%) of those aged 55+ pay off their balance each month to avoid interest charges.
About half (48%) of those aged 35 to 54 do the same, and only one-third (35%) of those aged 18 to 34 clear their balance every month. This shows a clear generational gap in financial habits.
Emergency Expenses and Savings Gaps
Credit cards can be lifesavers in emergencies, especially for 35 to 54-year-olds. They rely on their cards for emergencies twice as much as those over 55. And when it comes to savings, less than half (40%) of younger Americans have enough for unexpected expenses, compared to a majority (70%) of those over 55.
Intergenerational Financial Literacy and Perspectives
Several factors explain the generational differences in credit card use. Financial literacy, shifting attitudes toward lending (including the rise of buy now, pay later services), and where Americans of different ages are in their careers all matter.
Younger people simply haven't had as much time to save, which affects how they use credit cards.
Historical Context of Credit Card Debt
Looking at the bigger picture, the current level of credit card use isn't too worrying.
"Debt as a percentage of household income is returning to its pre-Covid levels, which is not terribly high in historical context," notes Jason Brown.
So, even though there are concerns, we're not in uncharted territory.
Generational Gap in Economic Confidence and Stability
Still, this research shows a growing gap in economic confidence and stability between generations.
This matters not just for lenders but for everyone. Younger Americans' financial habits and views on credit are shaped by today's economic realities, which are quite different from those of older generations.
Is Your Credit Card Building Your Future or Trapping You in Debt?
While credit cards are popular across all age groups, young people face unique challenges and dependencies. Financial institutions can help by stepping up and helping this group understand the long-term impacts of spending. By addressing these issues, we can perhaps ensure that credit cards become tools for building futures, not just avenues for accumulating debt.
So, what does your credit card usage say about you? Are you using it to build a stronger financial future, or are you finding it hard to escape the cycle of debt?
Participate in research with Ipsos iSay to share your thoughts and experiences as we continue this important conversation about credit and financial health. Plus, you'll earn rewards like gift cards or cash transfers. So be sure to check for available studies now!
The Ipsos research shared in this article has been sourced from:
https://www.ipsos.com/en-us/how-younger-americans-use-credit-cards-make-ends-meet
