Survey: No-Annual Fee Credit Cards Most Used By Baby Boomers and Millennials Than Other Generations

Survey: No-Annual Fee Credit Cards Most Used By Baby Boomers and Millennials Than Other Generations https://ift.tt/eA8V8J

When it comes to buying stuff, plastic is king with Americans, a new survey by the The Ascent reveals.

Some 45% of consumers choose using credit cards to make purchases as of January 2021, up from about 36% in 2019. Along with credit cards being the most popular way people pay, the survey also showed how Millennials, Generation X and Baby Boomers have different ways of using credit cards.

Simultaneously, America’s credit card debt has constantly fallen since the pandemic began a year ago. That number was $978.8 billion in November 2020, down from a record high of $1.0943 trillion in February 2020,  figures show. Higher joblessness and less spending tied to COVID-19 as well as credit card issuers offering less credit limits have been contributing factors for the drop. But the credit card debt figure is expected to rise this year as Federal Reserve officials project consumer spending to climb in 2021.

Some of the Ascent’s other top findings include:

  • Some 52% of Baby Boomers and 41% of Millennials have no-annual-fee credit cards, much greater than other generations.
  • American credit card users have an average of three credit cards, with Generation Z cardholders seeing the lowest ownership rates with an average of two.
  • 45% of respondents had used a balance transfer, up from 38% in 2019, potentially indicating debt problems from COVID-19.
  • The growing popularity of those paying with credit cards and cash mean resulted in debit card seeing   a striking drop from 57.5% in 2019 to to over 42% in 2021.
  • A quarter of American credit card owners say that a low interest rate is the most important feature in a card. Both a good rewards program and no annual fee came close with 22% each.
  • 63% of Generation Z cardholders say that mobile phone insurance is important, more so than any other generation.
  • Cash back credit cards are still the most favored credit card, with 46% of American cardholders with one.
  • Travel credit cards have grown the past two years, interesting in light of the COVID-19 pandemic.
    The Ascent distributed the survey to 2,000 American adults who own a credit card via Pollfish in late January. A Motley Fool firm, The Ascent reviews financial products including credit cards, savings accounts, mortgages, help people make informed money matter decisions.

A top priority for Baby Boomers (nearly 33%) and Generation (28%) are no-annual fee credit cards.
The card is a good way to maximize rewards and benefits without the high cost of a yearly fee, the Ascent reports. The firm adds the best no-annual-fee credit cards provide valuable perks like large sign-up bonuses and 0% intro APRs.

When asked what caused them to search for their last credit card, consumers had various answers. The responses included build credit at about 26%, earn cash back/points: 15%, have more available credit about 13%, and optimize awards 10%. Unsurprisingly, younger people were more likely to choose building credit or applying for a first credit card. That was notably true for Generation X with nearly 39% reporting they last searched for a card to build credit.

One uplifting survey discovery was over 60% of American cardholders pay their credit card bill in full monthly and avoid debt. They also apparently know the importance of building credit and taking advantage of some benefits that credit cards can offer. Still, there are some pitfalls. Some 55% of American credit card users have maxed out a credit card. Forty five percent needed to use balance transfer offers, including a stunningly high number of young adults in Generation Z at nearly 40%.

The Ascent concluded those issues could be partially due COVID. Overall, the firm added that Americans’ credit knowledge and habits are perhaps progressing positively.

 

 

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