Gen Z Card Users Are Dissatisfied With Rewards Programs

Generation Z consumers, those often digitally savvy 18- to 25-year-olds, have emerged as an important target market for financial institutions (FIs) seeking to expand their customer base.

One way FIs hope to win them over is by rewarding them when they use their FI-issued credit cards. 

But, as revealed in “The Credit Economy: The Role of Reward Programs in Consumer Credit Usage,” a PYMNTS Intelligence report created in collaboration with i2c, card issuers are missing the mark for many Gen Z card holders.

Make no mistake, Gen Z (and millennial) cardholders say they are highly interested in rewards programs, but when surveyed, Gen Z users voiced the highest levels (41%) of dissatisfaction with the reward programs. By comparison, only 28% of millennials expressed dissatisfaction with the rewards they receive. Generation X, baby boomers and seniors all appear to be relatively content with the rewards they get.  

This is not to suggest the more than 3,200 U.S. consumers we surveyed for the report were entirely happy with the card-reward experience.  

Seventy-two percent of all credit card holders who utilized those cards in the past three months say they’ve run into some form of friction. Nearly 1 in 3 say that friction occurs when trying to redeem their rewards. 

An array of factors contribute to this frustration. Twenty-three percent of users find the technology confusing. Another 22% say the lengthy redemption process is an irritant, while almost 22% complain that redemption details were unclear. 

One way to help cardholders disregard these frustrations would be to tailor rewards to the appropriate audience. For instance, when surveyed, younger consumers, particularly Gen Zers, identified nontraditional rewards — flash sales, event ticket access and referral programs, among others — as items they would better appreciate. Baby boomers, seniors, Gen X and millennials all expressed a strong preference for cash-back offers, which can be more generic (or versatile, depending on who you ask).

Credit card rewards programs themselves remain popular with all generations of consumers. Card issuers who want to reap high levels of customer satisfaction should put their efforts toward eliminating friction points consumers encounter when trying to redeem their rewards — and, if looking to build a long-term customer base, they should consider customizing the rewards they offer Gen Z card holders.