Credit cards have officially become Americans’ favorite payment method.
This marks a notable shift, driven largely by consumers’ growing attraction to the rewards that come with many credit card offers.
At present, issuers across the credit card industry are beefing up rewards programs to vie for more affluent cardholders.
Here at Savinly, we’ve pointed out before that Americans are increasingly comfortable with credit cards. In fact, U.S. credit card balances recently exceeded $1 trillion — the highest level since the 2008 downturn.
But for the first time, credit cards have eclipsed debit and cash as consumers’ preferred way to pay, according to the latest U.S. Payment Study from payment processor Total Systems Services (TSYS).
TSYS has performed this survey for six years. It polls 1,000 people who have at least one credit card and one debit card.
Here are some of the key takeaways from the research:
- Roughly 40% of respondents picked credit cards, compared with 35% for debit and 11% for cash.
- Higher earners are more inclined to favor credit cards.
- Older millennials — those between 25 and 34 — show the strongest preference for credit cards, with about 57% favoring them.
- Younger millennials — ages 18 to 24 — are the least likely to choose credit cards. At this stage they tend to lean toward debit.
Apparently when you hit 25, the Magical Credit Card Fairy materializes in a puff of glitter and hands you a Chase Freedom card.
What You Should Keep in Mind About Using a Credit Card
Don’t let that glossy metal go to your head. Pick the best credit card you can.
One approach: enroll in a free service such as Credit Sesame , which helps you hunt for cards that fit your needs. It also shows your credit score and provides advice on paying down debt.
Another route: a cash-back rewards card lets you earn money back on every dollar you spend.
Here’s a card we recommend: the Chase Freedom Unlimited. What sets it apart? You earn an endless 1.5% cash back on all purchases. Plus, if you spend $500 during your first three months (think groceries), you can receive a $150 sign-up bonus.
There’s no annual fee, and the cash-back earnings never expire. We used Credible’s annual rewards calculator, which projected $417 in yearly rewards based on our sample spending.* (You can plug in your own habits to see your potential rewards, too.)
Sign up — and take advantage of a 0% intro APR for 15 months — here.
Finally, here are 10 reasons to consider using a credit card instead of cash. Keep in mind, though: to avoid paying interest on purchases, clear your balance in full each month.
Credit cards aren’t suitable for everyone. We suggest using them only if you can handle them responsibly.
*Estimated annual rewards will vary based on the amounts you enter. Monthly spending category names and definitions differ among issuers, and categories may not align perfectly.
Jordan Avery is a senior writer at Savinly. They’re a debit card user.
