Millennials might be the most scrutinized generation in history. According to various claims, millennials are killing everything from diamonds to cereal. Conventional wisdom has been that millennials aren’t all that interested in credit cards, either. But is that really true?

In 2016, we reported that just 33 percent of 18- to 29-year-olds had a credit card. At the time, 55 percent of 30-49 year-olds had credit cards, along with 62 percent of 50-64 year-olds and 68 percent of those who were 65 or older.

Our latest data, compiled in Bankrate’s December 2021 credit card features survey, found 55 percent of 18-29 year-olds have at least one credit card. That goes up to 73 percent of 30-49 year-olds, 78 percent of 50-64 year-olds and 89 percent of those who are 65 and up.

As you can see, credit card adoption has increased across the board, and particularly among young adults (although they still lag their elders). What’s holding young adults back? I have a few theories.

Access to credit

This is probably the most important factor. One key milestone was the CARD Act, a federal statute that took effect in 2010. It included a provision that made it more difficult to get a credit card before age 21. It also established a tighter “ability to repay” standard for all cardholders and kicked credit card marketers off college campuses. These were included among other well-intentioned consumer protections. I’ve heard from many Gen Xers who got into trouble with credit card debt because cards were too easy to obtain during their college years.

The problem is it often takes credit to get credit. It’s like getting your first job. Employers want you to have experience, but it’s hard to get experience unless someone is willing to hire you. That can be a tough loop to break. Credit works much the same way. It’s an unintended consequence of the CARD Act, which has left many people in their mid and late 20s in credit limbo.

It certainly hasn’t helped that millennials and Gen Zers have been hit with a double whammy of economic crises in their young adulthood. The financial crisis between 2007 and 2009 and the COVID-19 pandemic both brought on unusually sharp recessions, which made lenders (and many consumers) especially cautious about risk.

Plus, since young adults are just starting out, they tend to have lower credit scores. In periods when lenders are risk-averse, they are among the most affected groups. They’re also more vulnerable, due to lower early-career salaries, less savings, hefty student loan burdens and overall financial situations that are simply more unstable.

Student credit cards and secured credit cards are traditional starter cards. Also, startups such as Petal® and TomoCredit have devised novel approaches that aim to expand access to credit for young adults and other underserved groups. Alternative credit scoring systems such as Experian Boost are another way young adults can join the credit system.

Debt aversion

“Gen Z is much more conservative in general with their spending and debt than previous generations,” says Jason Dorsey, founder of the Center for Generational Kinetics.

This potentially reflects a “chicken or the egg” dilemma—as in, are Gen Zers really debt-averse, or are they just having a hard time qualifying for credit products? I tend to agree that there’s a philosophical element to this.

On one hand, avoiding debt is an entirely rational behavior that will serve Gen Zers well. But sometimes credit is necessary—to buy a house or car, let’s say. And as unpleasant as student debt may be, having a college degree can substantially increase your earning potential in many industries. Also, remember maintaining a good credit score helps with more than just getting a loan. Landlords, utility providers and even some employers look at your credit reports.

More alternatives

Gen Zers love their debit cards. But if it’s harder to establish credit and if young adults are warier of debt, what are they supposed to do if they want to buy something they can’t fully afford today?

The buy now, pay later (BNPL) industry has emerged as a popular solution, and it has been growing like crazy. Companies such as Affirm, Afterpay and Klarna offer clearly defined payback terms that appeal to people who are afraid of open-ended credit card debt. Sometimes they’re even interest-free. In 2021, 41 percent of millennials and 36 percent of Gen Zers used a buy now, pay later plan, according to Cornerstone Advisors. On the other hand, just 30 percent of Gen Xers and 18 percent of boomers did the same. BNPL has largely remained outside of the traditional credit system to date, but that’s about to change.

The bottom line

While they’ve been somewhat reluctant, I do believe young adults will eventually jump deeper into the credit card pool. And they should. Credit cards offer much better rewards and buyer protections than other payment methods (including fraud resolution, purchase protection, extended warranties and more). Credit cards also help you build credit, which debit cards and most buy now, pay later plans (at least so far) do not.

Older millennials have clearly gotten the message. The launch of the Chase Sapphire Reserve® in 2016 heralded a new era of experiential travel perks that resonated with this age group. It also helps that the oldest millennials have turned 40 and are now more established in their careers and family lives.

I believe younger adults are coming around. As Discover CEO Roger Hochschild explained during his company’s January 2021 earnings call, “In my decades in this business, there’s always something that’s going to kill off credit cards. But so far, the growth trajectory of the industry remains solid.”

Have a question about credit cards? E-mail me at and I’d be happy to help.