How younger Americans use credit cards to make ends meet

The Ipsos Consumer Tracker asks Americans questions about culture, the economy and the forces that shape our lives. Here's one thing we learned this week.

2024 has delivered a bewildering set of mixed economic signals. In a confusing consumer confidence landscape, credit card usage touches on both the big picture and the lived experience: it ties into broader macroeconomic conditions (lending, debt, interest rates), even as it acts as a proxy for their microeconomic impacts (e.g. savings and spending). 

The latest round of the Ipsos Consumer Tracker finds that credit cards remain popular among Americans of all ages, backgrounds, and political views. (Seven in ten say they have a rewards, points or cashback credit card of some sort.) But it also suggests that many younger Americans are leaning on revolving credit to make ends meet — at a moment when heightened interest rates make such usage particularly costly. 

“Younger Americans are facing a confusing (and sometimes, challenging) short-term economic environment, and responding with skepticism about the long term. Financial institutions will need to do more to help younger Americans understand how their spending impacts their futures,” says Jason Brown, president and chief client officer at Ipsos.

“But when taken in context with more positive signals — like the Ipsos Consumer Confidence Index’s 2.7-point gain in April 2024 vs 2023 — this serves as a good reminder that no one measure can stand alone as a pure indicator of where we are and where we are going.” 

 

Ipsos found that Americans of all ages use revolving credit. But they use it in different ways. Unsurprisingly, younger customers are more motivated by the thought of improving their credit history (or establishing it in the first place). But while 69% of Americans over 55 pay their credit balance in full each month, half of 35 to 54-year-olds— and just 35% of 18 to 34-year-olds — do the same. 

Other findings suggest pinched budgets or emptied-out rainy day funds. 35 to 54-year-olds rely on their credit card for emergency expenses at twice the rate of those over 55 — which is maybe unsurprising, given that less than half (40%) of the younger Americans said they had enough money saved for an unexpected expense, compared with 70% of those over 55.

These gaps could be chalked up to a number of intergenerational factors: financial literacy, cohort perspectives on lending (undergoing change in the buy now, pay later era), and of course, the basic math of where Americans are in their career and how long they’ve had to save. These figures also fall in line with pre-pandemic norms, Brown says. . 

“From a short-term and high-level perspective, this level of credit card use is not alarming in itself. Debt as a percentage of household income is returning to its pre-Covid levels, which is not terribly high in historical context.” 

Still, these findings do suggest a widening generational gap in economic confidence and stability. That matters for lenders, but it matters for the rest of us, too. 

More insights from this wave of the Ipsos Consumer Tracker:

A new benchmark in our perception of COVID’s waning threat

Eight in 10 Americans value their credit card rewards

More say they can save money as mixed bag of economic opinions continues

The Ipsos Care-o-Meter: What does America know about vs. what does America care about?