Credit Card Industry Rebounds Thanks to Gen Z Consumers
The youngest generation of American consumers is playing an instrumental role in the recovery of the credit card industry. According to a TransUnion report for Q3 2021, Gen Z consumers are spurring credit card growth as the industry rebounds from the economic downturn caused by the pandemic.
In Q2 2021, the number of credit card organizations hit a record 19.3 million, an increase of more than 10 million compared to the same period in 2020. The Gen Z share of organizations rose from 13.3% in 2020 to 14.2% this year, marking a significant year-on-year increase and more interest in credit cards for young adults.
“Similar to previous generations, as more Gen Z consumers come of age they are actively expanding their credit products across the wallet. For most consumers, the first credit product of choice tends to be a credit card. [...] As we enter this new phase of the pandemic where accommodation programs are not as prevalent and liquidity sources such as stimulus funds are drying up, it is a natural next step for consumers to reassess their current credit obligations and apply for new forms of credit – especially if access to credit was minimal in the first place,” said Matt Komos, vice president of research and consulting at TransUnion.
The millennials, consumers born between 1980 and 1995, had the largest share of credit card originators last year, and this trend has continued throughout 2021. More precisely, millennials had 32.7% in Q2 2021, followed by Gen X with 28.8% and Baby Boomers with a 21.3% share in credit card originations.
“Card issuers are eager to meet the rising consumer demand for Gen Z by expanding access to credit and are actively managing credit line levels at origination to control for risk. These younger generations have shown interest in growing their credit obligations through both traditional products such as credit cards as well as through forms of credit such as Buy Now, Pay Later,” said TransUnion’s senior vice president Paul Siegfried.
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