Gen Z Warned About Credit-Card Spending

Generation Z is embracing “funflation” more than any other such group, according to a March survey by Bankrate, planning to spend more on travel and entertainment than millennials, Gen Xers and baby boomers—even as the price of fun has never been higher.

After the pandemic years, Americans across all generations appear to be generally more willing to loosen their purses for traveling, going out for lunch and dinner, and leaving the house to have fun.

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Some 30 percent of 2,276 U.S. adults told Bankrate they plan to spend more on traveling in 2024 than last year, while 25 percent said they aim to spend more on dining out, and 22 percent plan on spending more on live entertainment.

Twenty-seven percent of Americans told Bankrate that they are willing to take on debt to travel this year, while 14 percent said the same about dining out and 13 percent about attending a live entertainment event like a concert, a theater performance or a sporting event. Some 38 percent of Americans said they would go into debt for at least one fun purchase this year.

Gen Zers, those born between 1997 and 2012, are particularly eager to make up for the lost time during the pandemic, and they are willing to spend more on fun than older generations. Some 44 percent of Gen Zers told Bankrate they’re planning to spend more on traveling this year compared to 2023, against 37 percent of millennials, 20 percent of Gen Xers and 24 percent of boomers.

“Young adults definitely value experiences. This was true even before the pandemic, but I think the trend has accelerated,” Ted Rossman, Bankrate senior industry analyst, told Newsweek.

“There’s very much a ‘you only live once, so you might as well go on the trip or attend the concert’ way of thinking,” he continued. “I also hear some young adults saying that they feel pessimistic about other areas of their financial lives, such as being able to pay off student debt or save for a home purchase, so why bother? At least they can have some fun along the way.”

While Rossman doesn’t want to tell people they can’t have any fun, he said he feels obligated to point out the dangers of carrying credit-card debt with the average rate at a record-high 20.75 percent.

“Minimum payments toward the average balance—$6,360, according to TransUnion—at the average interest rate would keep someone in debt for 218 months and cost $9,542 in interest,” Rossman said.

“I suggest setting aside a specific entertainment budget. Often, people either don’t set a budget, or if they do, they only account for necessities. With summer approaching, now is a great time to start setting aside money from every paycheck so that you don’t take on pricey credit-card debt the next time you get invited to a wedding, a concert or some other event.

“Another good tip is to tap into unused stores of value such as credit-card rewards, frequent flyer miles and gift cards. You might be sitting on hundreds of dollars in value,” Rossman said.

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Gen Zers also led the way for their eagerness to eat out: some 39 percent of Gen Zers, 31 percent of millennials, 17 percent of Gen Xers and 18 percent of boomers said they expect to spend more on dining out this year. When it comes to live entertainment, 44 percent of Gen Zers, 30 percent of millennials, 14 percent of Gen Xers and 9 percent of boomers expect to spend more in 2024 than they did last year.

Gen Zers and millennials are also more inclined than older generations to take on debt for fun activities. Some 30 percent of Gen Zers and 35 percent of Millennials are willing to take on debt for travel, against 23 percent of Gen Xers and 22 percent of boomers.

Some 22 percent of Gen Zers, 23 percent of millennials, 9 percent of Gen Xers and 8 percent of boomers are willing to take on debt for dining out; while 22 percent of Gen Zers, 23 percent of millennials, 7 percent of Gen Xers and 4 percent of boomers are willing to take on debt for live entertainment.