Why younger Americans use credit cards to buy their future, not their coffee
Ask a credit card user why they use one, and odds are they’ll say, “for the miles” or “for the cashback.” Since the 1980s, credit cards have been used for their rewards systems, but the newest generation of cardholders hasn’t gotten the memo.
A new survey of 1,000 respondents conducted Oct. 22, 2025 by Credit One Bank found that 38% of older, higher-income consumers cite cash back and points as their primary motivator, while 37% of younger, lower-income consumers say building credit is their top reason they carry a card.
This survey suggests that after 40 years of selling credit cards as a reward, the industry needs to change its thinking for the new generation.
Gen Z Is Using Credit Cards to Get a Leg Up
Instead of enticing rewards like cash back or miles, Gen Z is using credit cards to get a jump-start on their credit. The opening stat, 37% of lower-income consumers, shows that credit cards are now a means to an end, like an apartment lease or a car loan, instead of a stockpile of rewards you can use at a later time.
They are also the generation to use AI to help build their credit. Nearly a third (32%) of Gen Zers say they have used AI tools like Copilot, ChatGPT, or Gemini to improve their credit score. This is compared to 21% of overall respondents who say the same thing.
The survey suggests that Gen Z is not waiting for a financial advisor to make things happen. They want immediate, actionable answers, and they’re finding them through AI.
Spending Is Up, and the Gender Gap Is Wider Than Expected
Nearly half (49%) of all consumers say that their credit card usage increased in the last two years. Among men, that number rises to 56%, while among women it is 42%.
The data shows a 14-point discrepancy between men’s and women’s spending habits. This could be due to the different financial roles in the household or different comfort levels with revolving debt. The biggest reason could be due to different spending categories getting hit with inflation.
Whatever the reason, the survey shows that it’s not just “people spending more.” Men and women are developing different spending habits, and institutions should take notice.
Credit Card Balances Are Creating Emotional Tolls
It’s never easy carrying debt, but the survey suggests that it takes more of an emotional toll than expected. More than 3 in 4 (77%) consumers say carrying a credit card balance month to month creates anxiety for them.
Yet the behavior is widespread. Three in 5 Millennials reported an ongoing balance at least once in the past year, while Gen Xers followed at 59%. Gen Zers came in at 52%, and Boomers at 37%.
Millennials and younger Gen Xers are the most likely to use credit cards for their purchases, as they are in the years when housing, childcare, daily expenses, and caregiving costs collide. They are called the "sandwich generation,” where they are “squeezed” by various demands of raising children and taking care of aging parents.
Boomers Are First In Credit Health, While Gen Z Demands More Literacy
Baby Boomers have had their credit cards the longest, and it shows. About a third (33%) of Baby Boomers had the healthiest relationships with their credit cards, compared to 29% of Gen Xers, 23% of Millennials, and 14% of Gen Zers.
The youngest generation is not calling it quits yet. Sixty-five percent of Gen Zers believe some form of mandatory financial literacy course should be required before a person receives their first credit card. So, while they don’t have the best relationship with their cards, it’s not for lack of trying to understand an already difficult industry.
Luckily, policymakers have heard their cries. According to the National Endowment for Financial Education, 29 states now require a financial literacy course for high school graduation.
The credit card started as an emergency tool, transformed into a rewards engine, and has now taken on the role of finance credentials. One thing the survey does make clear: each generation uses a credit card for something different, and institutions would be remiss to ignore that.
This story was produced by Credit One Bank and reviewed and distributed by Stacker.
