The humble debit card is making a comeback

Credit cards make up ~50% of all card transactions in the US, but several people, particularly Gen Z and younger generations, are cutting back on them and using their debit cards.

The shift reflects both financial caution and practical savings, and most importantly, debt concerns.

Credit-card balances nationwide reached $1.2 trillion at the end of 2024, with interest averaging over 21%, costing the typical user $1,657 annually in payments. In contrast, overdraft fees on debit cards average just $118 a year.

While credit cards’ allure exists with the reward points they offer, analysts note the shift to debit is driven by the high credit interest rates, cultural preferences, and heavy promotion from companies like Venmo, Experian, Cash App, Klarna, and Chime, many of which now offer debit cards with rewards.

Gen Z is especially wary of debt and more likely to use debit over credit. In a 2022 survey by S&P Global, 25% said they want to avoid debt at all costs. Influencers and TikTok creators amplify this message, reinforcing debit as a safer choice.

For many Americans with tighter finances, debit offers a way to stay on budget, avoid compounding interest, and step off the treadmill of escalating credit-card debt.

However, credit cards remain dominant, especially among wealthier households earning over $150,000, who use them to maximize rewards.