Generation Z loves credit perks but is wary of debt
While the majority of Generation Z consumers are keen on credit card rewards (86% want cash back, 84% want rewards that don’t expire, and 83% want bonus rewards in certain spending categories) a surprising 78% also admitted they are afraid of assuming debt. This article is copyright 2021 The Best Customer Guide.
Additional findings from the study included that many Gen Z shoppers also want:
Credit, but they are shut out Nearly three in 10 (27%) Gen Zers claim they were turned down when applying for their first credit card – a rate that is two-times higher than any other generation.
A blend of traditional and digital choices While cash and debit cards are the top payment types across all consumers, Gen Z also welcomes non-traditional digital payment options. The majority (53%) use person-to-person payment apps (more than any other generation), half (50%) use PayPal, and one in four (25%) would consider using cryptocurrency.
Purchase-based payment flexibility Payment use among Gen Z is influenced by the purchase at hand. Looking at purchases valued between US$30 and US$150, credit cards are preferred by more than one in three (36%) Gen Z shoppers, while one in 10 say they would use buy now, pay later for a US$500 purchase.
End-to-end control When asked about features they would like to see in their payment solutions, nearly eight in 10 (79%) want to manage all of their accounts in one place, and digitally pay from whichever account they choose. More than half (59%) want the ability to schedule all of their split payments on a single day of their choosing.
Secure experiences The study found that security is more important to Gen Z than any other generation. Nearly nine in 10 (86%) want protection from fraudulent websites, over eight in 10 (83%) want the ability to lock their account if they expect fraud, and more than three in four (76%) want two-step authentication for the payment methods they use.
“Our study depicts a cautious, responsible and choice-driven Gen Z consumer – but one whose needs are not fully being met by traditional credit and other payment options,” said Val Greer, EVP and chief commercial officer, Alliance Data. “With US$143 billion in buying power, retailers can open the door to this group which in 10 years is projected to have more buying power than millennials and baby boomers combined, by diversifying payment choice that includes tech-driven, clear-termed financing like buy now, pay later, that eases debt fears and gives control over cash flow.”
A sample of 2,515 US consumers participated in the Next-Gen Impact study through an online quantitative survey that took place from August 6-12, 2021. Additionally, qualitative feedback was gathered from a total of 22 US consumers, ages 16-24 in an online discussion board conducted on July 15 and 16, 2021. The full ‘Next Gen Impact’ study has been made available for download from Alliance Data’s web site at https://www.alliancedatacardservices.com
This article was first published by Customer Strategy Network. Permission to use has been granted by the publisher.