Why Gen Z is embracing BNPL over credit cards, and how brands can design cobrand programs that win their loyalty.
Here’s something that should make every credit card executive sit up straight: as of 2025, 56% of Gen Z consumers say they actively prefer buy now, pay later over credit cards. Not just during the holidays. As a standing preference. Nearly 40% use BNPL weekly or more frequently. For a payment form that barely existed a decade ago, that’s not a trend. That’s a migration.
Before you draft the memo about Gen Z abandoning credit forever, let me offer a different read. Gen Z isn’t anti-credit. They’re anti-bland-credit. And right now, the market isn’t giving them enough reasons to feel differently.
Let’s be clear: Gen Z is using credit cards. According to TransUnion, 84% of Gen Zers aged 22–24 carry at least one credit card. In 2025, average balances climbed to $2,990, and they’re holding about 1.5 cards each. So, this isn’t a generation walking away from the product entirely.
But behavioral data tells a complicated story. Only 27% of Gen Z report using a credit card as their primary payment method, while a majority prefer debit or BNPL. Just 8% of Gen Z say they have zero concern about credit card debt—compared to 26% of Boomers. That gap isn’t just generational anxiety. It reflects a cohort that grew-up during financial instability, watched their parents navigate the 2008 crash, and entered a job market reshaped by a pandemic. For them, debt isn't a tool; it's a trap.
I understand the appeal of buy now, pay later. It’s transparent. It’s predictable. You know exactly what you owe and when. For a generation that distrusts surprise fees and confusing APRs, that clarity is genuinely valuable.
But that doesn’t mean BNPL is always better. Here’s what BNPL doesn’t offer: a grace period. Rewards. Purchase protection. Travel insurance. Fraud liability coverage. The perks that make a premium credit card worth carrying are almost entirely absent from most BNPL products (at least for now). Moreover, in 2025 nearly 24% of BNPL users missed a payment; those lapses aren’t free.
The same structural gap applies to debit: it spends down your own money, full stop. No float, no points, no path to a better credit score. The tools Gen Z gravitates toward may feel safer, but they’re leaving real value on the table. That’s not a consumer preference problem. That’s a product design and marketing problem—one the industry has unintentionally created.
The opportunity isn’t invisible. Brands like Zara, Urban Outfitters, and SKIMS, to name just a few, that live and breathe Gen Z—sit in a genuinely underserved position. Their customer base is loyal, identity-driven, and increasingly financially active. A cobrand credit card built around their purchasing behavior and authentic to their brand could offer exactly what converts a skeptic into a cardholder: rewards on everyday spending, exclusive access, early sale notifications, and experiential perks.
And the proof that this generation can be converted? Look at what’s already happening with premium cards. As of 2025, Millennials and Gen Z account for 75% of new American Express Platinum and Gold accounts and now represent 36% of total Amex card spending—matching Gen X’s share of the platform. In Q2 2025, they drove 71% of new Amex card acquisitions. Gen Z cardholders continue to post 40% year-over-year spending growth on the platform. The U.S. Gold Card saw an 80% surge in acquisitions.
This generation was raised on subscription services and are willing to use, and even pay for, credit card products when the value and brand positioning is done right. Give them something worth carrying, and they’ll carry it—and spend heavily on it.
The clock is already ticking. Every generation ages into financial products. Millennials were skeptical of traditional banking in their twenties. Now they’re the core segment for premium credit, mortgages, and wealth management. Gen Z will follow the same arc. The question isn’t whether—it’s when, and more importantly, who captures them first.
The window for a new cobrand entrant to establish itself with Gen Z is open today. Five years from now, the payment habits will be formed. The wallets will be full. The brand loyalties will belong to whoever showed up first with a product that actually made sense for them.
The brands that move now—with intentionally designed products, Gen Z-native marketing, and value propositions built around experiences rather than points tables—are the ones that will own this generation’s financial identity for decades.