Generational change could be driving some of these trends. As the large millennial generation gets older, they’re making more money and feeling more confident about taking out credit cards, said Aite Group analyst Kevin Morrison.
Credit cards are most popular among Americans 25 to 44. Both younger consumers, who often have trouble qualifying for credit cards, and older consumers prefer debit.
Inundated by credit card promotions, these millennials are carefully choosing the cards with the best perks, Morrison said. Compared to older generations, “they're just more savvy," he said. "They scrutinize offers and deals. At the end of the day, they recognize credit as a tool.”
Still, there are dangers to chasing credit card rewards. Reward cards charge annual fees that can exceed $500 a year. They also tend to charge higher interest rates than other cards.
“The use of credit cards with rewards can be valuable,” said financial counselor Willa Williams, of Trinity Financial Coaching in Grosse Pointe, Michigan. “You just have to be disciplined enough to make purchases for which you have the money to pay the bill.”
This article was provided by Bloomberg News.