What You Don’t Know About Next-Gen Consumers and Cards Can Hurt Account Retention and LTV

Banks and credit unions are investing heavily to win younger consumers, particularly as Gen Z enters adulthood and millennials move deeper into their prime borrowing and wealth-building years. But even if these consumers establish a checking account and set up direct deposit, they may still turn elsewhere for credit, savings, investing, and other financial needs.

In fact, younger consumers’ satisfaction with their financial institution does not necessarily translate into a broader or more durable relationship, according to a 2026 analysis by Deloitte. Such accountholders are increasingly comfortable assembling their financial lives across multiple providers and have a strong propensity to switch. Nearly 70% of millennials and Gen Z have authorized their banks to share data with other financial providers, the analysis said.

Key insight: Acquiring millennial and Gen Z accounts is only a first step. Banks and credit unions also need to earn the right to become part of these customers’ and members’ everyday financial lives. This is where credit cards may offer an answer.

While credit cards are a product that institutional strategists might not necessarily associate with digital-native consumers, younger consumers are emerging as among their most engaged users. That’s the jumping-off point of a new white paper from Elan Credit Card, “From Swipe to Loyalty: Credit Card Strategies to Win Gen Z and Millennials”.

Key takeaway: According to the report, Gen Z consumers are acquiring their first cards earlier than other generations, inspired by their respective experiences in the pandemic-induced recession and the Great Financial Crisis: TransUnion found that 84% of credit-active Gen Z consumers ages 22 to 24 held a bank credit card in 2023, compared with 61% of millennials at the same age a decade before. Meanwhile, millennials are paying by credit card more frequently than other generations, with 36% using a card at least once a day, according to a Forbes Advisor survey.

For community banks and credit unions, that strategic opportunity is now more like a strategic imperative:
How can a financial institution make their card useful enough, convenient enough and flexible enough to win a central place in how younger customers manage their financial lives?

Target Everyday Relevance

Unlike a mortgage or auto loan, a credit card can become part of the accountholder’s routine, generating not only habituated transactions but also frequent status checks, to manage balances and track rewards. That keeps the bank and credit union brands front and center and multiplies touchpoints in which other products and services can be offered.

Key insight: Younger consumers open credit cards for one set of reasons but may use them for others. The initial decision to get a credit card may include building a credit rating or creating a financial safety net — especially at a time when affordability is a growing concern. They may be following the advice of someone they trust, such as a parent. Or they may find a credit card is required to complete certain transactions (e.g, a car rental).

But long-term usage drivers run deeper, reflecting a desire for a transactional hub that offers flexibility, convenience, and connections to other financial products. To meet that need, banks and credit unions must evolve the card from a “point solution” to a versatile tool that supports and enables many aspects of a consumer’s life.

To understand the role credit cards might play in strengthening these millennial and Gen Z relationships, and bridging the gap between account-opening and long-term value, The Financial Brand spoke with Mitch Pangretic, SVP, Director of Strategic Partnerships of Elan Credit Card. He described three aspects of a credit card offering that can help financial institutions keep the next generation on track for primacy.

The Next-Gen Punch List

1. Mobile-first experiences: Younger consumers’ status as digital-native consumers might not prevent them from acquiring a credit card, but that doesn’t mean it’s not a factor in how much they use their card. Some 87% of Gen Z cardholders say that the quality of a card’s mobile app influences which card they use the most, with millennials close behind at 82%, according to a 2026 report from PYMNTS Intelligence and Elan Credit Card.

This compares with 69% for all cardholders. The converse is also true: Nearly 25% of all cardholders, and 45% of Gen Z cardholders in the PYMNTS / Elan study said that a poor app or digital experience had caused them to reduce or stop using a card. “For these cardholders, top-of-wallet really means top-of-phone,” said Pangretic. “The ease-of-use and quality of their mobile experience determines which credit card they use the most.”

2. Personalization and support: Personalization is fast becoming a critical capability for financial institutions, and it matters especially for Gen Z and millennial cohorts who place high value on lifestyle-relevant capabilities and authentic communications. Deloitte’s 2026 banking trends report emphasizes both the focus on personalization and its importance to younger generation consumers. In a 2025 study, Mastercard said that Gen Z consumers in particular see personalization as significantly more important than the average consumer does, citing features from customizable checkout screens to smarter ways to track spending and build credit. Rewards play a role, too — especially for Gen Z.

For the youngest cardholders, including Gen Alpha, this may also include partnering with a cardholder on their journey to financial literacy, this is something 73% of teens said they wanted more of, according to Mastercard. The user experience, for example, might include embedding contextual tool tips, interactive payment calculators, and spending insights, or gamified financial literacy features directly within the card’s mobile application. “This type of feature can reinforce the core banking relationship by positioning the credit card as a hub connecting checking and savings accounts, improving financial literacy, and opportunities to borrow,” said Pangretic.

3. Flexible ways to pay: The conventional wisdom holds that digital-native consumers are more likely to adopt the latest fintech tools to meet specialized financial needs, but data shows that’s not always the case. Plateauing adoption of buy now, pay later (BNPL) services is a case in point.