New research reveals Gen Z may be the savviest generation when it comes to credit cards. This age group is the most likely to take advantage of 0% balance transfer and money transfer deals.
So, what else does the data reveal about credit card usage in the UK? Let’s take a look.
[top_pitch]
How does Gen Z use credit cards?
According to MoneySuperMarket, members of Gen Z – those born between 1997 and 2012 – may be the most astute when it comes to credit cards. That’s because research from the price comparison website reveals members of this generation who avoid having to pay credit card interest are the most likely group to make use of 0% balance transfer and money transfer offers.
According to the research, 32% of Gen Z’ers who don’t pay credit card interest take advantage of 0% balance transfer credit cards. Meanwhile, 36% of the same group make use of 0% money transfer credit cards.
In stark contrast, 85% of older credit card customers – aged 65 and over – who avoid having to pay credit card interest simply clear their balance in full each month. While there’s nothing wrong with this, especially for those with a reward credit card, it does suggest older groups aren’t exploiting lengthy interest-free periods like their younger counterparts.
[middle_pitch]
Using credit cards correctly
While credit cards have the power to harm finances when used incorrectly, using plastic to borrow or shift debt to 0% is an excellent way to use them to your advantage.
Jo Thornhill, money expert at MoneySuperMarket, explains this in more detail: “With the cost of living crisis becoming a growing concern, it’s time for us all to make sure we’re getting the best out of our personal finances. It starts with how we manage credit cards. When used carefully, credit cards can be a great way of helping to spread the cost of purchases and can help you get on top of your finances. However, too many Brits are paying interest on their cards when they needn’t be – particularly when there are so many good deals out there in the market.”
Thornhill goes on to explain the benefits of shifting debt to a 0% balance transfer credit card.
She explains: “Balance transfer cards are a great option for those looking to clear their debt. With this type of credit card, you can transfer your existing balances onto one low or 0% rate card, consolidating your debt all in one place at a lower interest rate. By transferring to a 0% rate card, you could also avoid paying interest for up to two years. Just be careful when it comes to the end of your interest-free period though, as you could end up paying much higher charges.”
To learn more about using plastic responsibly, take a look at our article that explains how to use credit cards the right way.
What else does the research reveal?
In addition to highlighting the credit card habits of Gen Z, the research also highlights the fact that over half of credit card users have an outstanding balance. Of this group, a third pay interest, with the average interest payment standing at a whopping £121.40 a month. That’s equivalent to £1,456.80 a year.
Among credit card users who don’t pay any interest, 68% clear their balance in full every month. Perhaps surprisingly, less than a third (31%) say they make use of credit card deals.
Another interesting stat from the research is that those aged 35 to 44 are the most likely to have outstanding credit card debt. The average credit card balance among this age group is £1,091.80.
To learn more about borrowing on plastic, take a look at the Motley Fool’s guide to the different types of credit cards.
