If there’s one thing that we’ve learned over the past few years, it’s that the economy is unpredictable and nearly every average American has had a tough time in some respect at some point.
In fact, the latest Morning Consult’s Cash App Afterpay survey found that about half of Americans can’t afford an emergency expense equal to or greater than $500, and 83% said that overspending—understandably—caused them stress.
While the study surveyed 5,412 American adults across generations, the younger crowd has had a harder time dealing with savings and paying off bills at a time when costs keep rising.
But instead of letting bills pile up, both Gen Z and millennials are ditching the old credit card and opting for debit cards instead in order to stay more financially responsible.
In fact, 63% of Gen Z surveyed said they had already abandoned credit cards in favor of other payment methods such as debit cards and even plain old cash, while more than half stated that credit cards gave them the “ick.”
“It’s not just a slow fade, but a generational reset pointing to a clear distaste of the traditional credit model that it’s not servicing their current needs at a time when interest rates and cost of living are high,” Alison Meyer, head of B2B marketing at Cash App Commerce, told Retail Brew in an email. “This shift is fueled by a mix of financial reality and changing expectations. Gen Z is entering adulthood amid economic instability, inflation, and rising living costs. They’re more cautious, digitally fluent, and hyper aware of how financial tools impact their mental well-being. ”
Moreover, credit cards seemed to induce a sense of anxiety among the young; about 57% of Gen Z spenders said they didn’t entirely understand payment terms. In fact, a considerable number are opting for buy now, pay later (BNPL) options instead which, according to Meyer, offer “clarity, structure, and control in real time.”
The rise of BNPL among consumers is not recent as a survey of 4,300 US consumers by JD Power previously noted that many Americans preferred using BNPL options over credit cards for their holiday shopping purchases last year.
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The irony is that BNPL often pushes consumers, particularly younger shoppers, toward purchases that they can’t necessarily afford. Still, the heart wants what the heart wants, and it’s important for retailers to be informed and provide flexible payment options as many shoppers will not buy a product if their preferred payment option is absent.
According to the Cash App study, 50% of US adults said they are likely to abandon a purchase if their preferred payment method isn’t available—with Gen Z (46%) leading the trend.
“Personalization is key and brands that use data to deliver tailored offers such as exclusive deals will have a leg up,” Meyer said. “Just as important is the checkout experience, especially as Gen Z expects it to be seamless, mobile-friendly, and flexible, with trusted options like BNPL, debit, and even peer-to-peer payments. If it feels clunky or limiting, they’ll ditch their cart for elsewhere.”