New research from Afterpay has revealed an unprecedented rejection of credit cards among young New Zealanders.
Data showed a seismic shift as younger generations abandon traditional credit in favour of more transparent payment alternatives, such as Buy Now, Pay Later (BNPL).
The ‘Why Credit Cards Give Gen Z the Ick’ report, conducted by Morning Consult, offers a deep dive into the evolving financial behaviours of New Zealand consumers.
The report surveyed 20,000 people worldwide, including more than 1,100 New Zealanders, uncovering a dramatic shift in payment preferences that signals the potential end of credit cards' dominance among younger generations, alongside a rising preference for debit cards and BNPL options.
Financial stress is high, especially among Gen Z
Amid the current cost-of-living crisis, many consumers are struggling to manage their finances, according to the report. Although more than four in five New Zealanders use budgets to manage their shopping expenses, over 70 percent find managing their spending to be challenging.
Nearly half of all New Zealanders have less than NZD 900 saved up to cover an emergency expense, and a quarter have no emergency savings. For Gen X, more than half report they have less than NZD 900 in savings.
Credit cards: A source of anxiety
Credit cards do little to alleviate financial stress, and, for many New Zealanders, they create it. Six out of seven New Zealanders agree that credit cards can be financially hazardous, and nearly three-quarters of Gen Z report that credit card bills cause them anxiety or stress.
For some younger consumers, this comes down to high interest rates, with 38 percent of Gen Z and 46 percent of Millennials saying they’ve been surprised by the amount of interest they pay on their bills.
Others admit that they don’t fully understand credit card terms. For others, the issue is mounting debt, with more than one in six New Zealanders owing NZD 8,800 or more in credit card debt.
The growing ‘ick’ factor with credit cards: A generational shift
Consumer sentiment around credit cards is shifting, with nearly three in 10 New Zealanders reporting that their view of credit cards has become more negative in the past 12 months.
Meanwhile, more than a third of Gen Z say that credit cards give them the ‘ick’. Compared to other generations, Gen Z is also most likely to say that credit card debt makes them feel ashamed and scared.
New Zealanders are opting for debit and BNPL over credit cards
As dissatisfaction with credit cards grows, consumers are actively seeking out alternative payment methods that offer more transparency and control.
Debit cards are the most used form of payment among Gen Z and Millennials, followed by cash and bank transfers. Credit cards were the least-used payment method for younger consumers.
According to the report, 60 percent of New Zealanders who have had a credit card have switched to another payment method. Among Gen Z, 34 per cent have switched to other payment methods from credit cards multiple times, and nearly two-thirds have stopped using credit cards on a daily basis.
Meanwhile, BNPL solutions, such as Afterpay, are gaining popularity, with 44 percent of New Zealanders expressing interest in trying them in the future. This rises to 55 percent of Gen Z and 61 percent of Millennials.
Younger generations particularly like the way BNPL enables them to spread payments out, with 61 percent of Gen Z and 64 percent of Millennials saying they’d purchase with BNPL for this reason.
The future of payments: choice, control and financial wellbeing
The findings underscore a broader shift towards financial tools that prioritise transparency, accessibility and flexibility.
Consumers are reevaluating their relationship with traditional forms of credit, seeking payment methods that empower them to manage their finances without the emotional stress that comes with debt.
Afterpay is at the forefront of this shift, offering a transparent way to pay, without the stress of compounding interest rates and opaque terms and conditions. Afterpay’s pay-over-time model gives customers control over their spending and enables them to manage their finances on their terms, ultimately taking charge of their own financial future.
