The next generation of credit-ready South Africans has opened bank accounts, and, compared to older generations, these consumers have a unique perspective on credit cards.
A recent TymeBank survey offers insight into some interesting trends, including how Generation Z, aka Gen Z, is managing credit card usage. We consider these patterns, and what we can learn from them.
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How Gen Z differs from older generations
In February 2022, TymeBank ran a survey among 1,000 South Africans to establish banking habits among customers with different demographics, such as varying age groups.
Among the findings, says Cheslyn Jacobs, executive of sales and service at TymeBank, is that 46% of Gen Zs own a credit card. He suspects that the popularity of online shopping may have contributed to this.
“Even though 32% of overall respondents said that they predominantly use their credit cards to access credit, we found that Gen Zs were more interested in using their credit cards to manage their money and monthly transactions,” says Jacobs.
This means that they still make use of their credit facility. However, this is not their main interest or priority.
“While the majority of them are using their cards to buy clothes online, this is likely due to the functionality and convenience of the card rather than the credit facility,” says Jacobs.
He points out that they’re also more likely to use their cards for day-to-day entertainment. Conversely, they’re less likely to put holidays or other travel experiences on their credit cards.
What we can learn from Gen Z
Jacobs believes that Gen Zs display a solid sense of responsibility when it comes to credit card usage. “This is in line with their overarching lifestyles and attitudes. They are far more debt-averse than their older counterparts,” he says.
In part, this may be because they grew up witnessing Millennials struggle with large amounts of student debt, making it difficult for them to build their savings and progress financially.
Jacobs believes that Gen Z’s caution is understandable, and it seems as though they are managing to sidestep excessive debt - this having historically been a pitfall of credit card usage.
Gen Zs also prefer to use their credit cards for smaller purchases rather than large expenses. Since credit cards usually have interest-free periods, buying smaller items allows the consumer to settle the amount before the interest kicks in.
If you’re finding yourself neck-deep in debt, consider debt consolidation.