Credit card reward trends reveal that millennials are saving while Gen Z is donating to charity

There are tons of ways to use your credit card cash back or rewards points (options differ depending on your specific card), but some of the most common redemptions are statement credits, direct deposits, gift cards, and travel. But you can also donate your rewards to charities, a rising trend among Gen Zers. Imprint, a credit card issuer, analyzes the data collected from its co-branded cards to personalize its reward programs with customer-trusted brands. In doing so, Imprint noticed striking differences in how millennials and Gen Z are using their rewards. Imprint’s data shows that while millennials are holding onto their credit card rewards for longer periods of time, Gen Zers are using their rewards in smaller increments and even often donate them to charity. In general, Gen Z is showing overall smarter credit card behavior compared to how millennials were spending at that age. “We know our cardholders intimately well. We see everything in real-time, minute by minute. That’s how we get our data. That’s how we see how people are spending, but also how people are spending their rewards,” says Daragh Murphy, cofounder and CEO of Imprint. As a Gen Zer myself, I was at first surprised to hear that my generation was donating a lot of their rewards. I really value my credit card rewards and sometimes even rely on that little extra pocket change, so at first I was shocked. But after talking with Murphy, it was easy to see why donating rewards appeals to Gen Zers. However, it’s important to recognize that data on Gen Zer’s credit card use is fairly recent and subsequently limited. So although new data can give us a look into trends, it can’t be taken as an absolute truth for all credit card users.

Millennials are getting older and saving their rewards longer

Millennials (ages 26 to 41 years old) are getting older and settling down with their own mortgages and families. With age often comes wisdom (or at least more experience) and it’s now being reflected in their spending habits. Over the past three years, Imprint has been able to track millennials’ credit reward spending habits, and found underlying trends that reflect how the generation has aged. “People (millennials) are aging into buying a home or having a baby. That naturally just changes your buying habits and how you think about your personal finances, and what you do with rewards,” says Murphy. Imprint is seeing that millennials often hold onto their credit card rewards for longer periods of time. Millennials are “saving up towards the next big thing,” as Murphy describes it. This could be anything from big vacations to paying down debt. But these weren’t the only trends that Imprint discovered. In fact, what made millennials’ card use stick out so much is how the data differed from Gen Z’s habits.

Gen Z is showing savvier credit card use

Gen Zers (otherwise referred to as zoomers) range roughly from 10 to 25 years old. Since Gen Z is just aging into credit cards, the data is limited. Still, Imprint was able to see credit card trends that hint toward the generation’s future financial savviness. “What we see with Gen Z is that they are much savvier. They are more willing to think about ‘what’s the best deal’, and ‘how do I stack coupons with my rewards,'” says Murphy. Gen Zers, at least the ones old enough to own a credit card, are doing more research and being more selective in their credit card use. Murphy reflected on his own experience as a millennial and speculated that since many millennials grew up around the financial crisis that they might have an aversion to most financial products (even helpful ones). On the other hand, Gen Z seems to be taking a drastically different approach to financial products, and by and large, credit cards. Murphy says Gen Z is “savvier about how they use their rewards than millennials were at that age.” I wasn’t surprised to hear that my generation is finding better and smarter ways to use credit cards. Although Gen Z is lacking in experience, the internet is starting to make up for the difference. With an endless database of information at our fingertips, being smart about credit cards has never been easier. For most of my life, if I wanted to know about something, I relied on the internet to teach me about it. Even when I started researching credit cards, the first place I turned to was Google. With a few clicks, I was able to access hundreds of blogs, credit card reviews, guides, and first-hand accounts on every card to ever exist (honestly, it gave me information overload). That said, knowing about credit cards doesn’t automatically make you good at using them. Sometimes applying learned knowledge takes time and practice — something that Gen Z (and even some millennials) are still getting the hang of.

Gen Z is donating more rewards to charities

Unlike millennials who are storing away their credit card rewards for a rainy day, Gen Zers are cashing in their rewards faster and in smaller increments. But the most fascinating part is not when Gen Zers are using their rewards, it’s how. Although cash back, statement credits, direct deposits, and gift cards are among some of the most popular redemption options, Gen Zers are increasingly donating their rewards to charities. “Gen Z is asking, ‘how can I donate my rewards?’ and ‘how can I use what I’m getting for free impact’,” says Murphy. “Gen Z gives a lot to environmental causes. We’ve seen an uptick in people giving money towards women’s shelters, especially with the change in the supreme court ruling.” The internet has provided an accessible means of sparking activism and spreading awareness that Gen Zers have grown up with. By the time I was in middle school I was already retweeting posts about workplace discrimination and watching YouTube videos about the effects of global warming. So it’s not surprising that Gen Zers are taking advantage of their credit card rewards for the betterment of others, even if it’s only a little at a time. They are giving what they can (no matter how small) whenever they can. In my own experience, I’ve noticed more and more credit cards adding charity donations as a redemption method. This has been partially appealing to me as a young adult with a limited income as I can now donate money without touching my own bank account. If this donation trend continues, it’s possible that more credit cards will add charities as a common redemption method. However, it’s unclear whether or not Gen Z will continue to donate their rewards as they get older, or if their priorities will change with age and financial stability to better resemble how millennials’ are currently using their rewards.