BofA Tracked Credit and Debit Spending By Generation—How Do You Stack Up?

Core Insights - Americans are increasingly using credit and debit cards for payments, with a notable generational divide in spending behavior [2][6] - Total credit and debit card spending per household rose by 2.4% year-over-year in October, indicating the strongest growth in nearly a year, despite a decline in the number of retail purchases [3][5] - Baby Boomers are leading the spending growth, significantly outpacing younger generations, while Gen X holds the highest average credit card balances at $9,600 per household [4][7] Spending Trends - The overall card spending per household increased by 2.4% year-over-year in October and 0.3% from the previous month, marking the fifth consecutive increase [5] - Payments for services are driving the growth in spending, while the number of retail transactions has decreased since January, suggesting inflation is influencing spending patterns [5][9] Generational Spending Divide - A 2024 Federal Reserve report indicates that credit and debit cards account for over 60% of monthly transactions, with cash usage at only 16% [6] - Higher-income households, which tend to be older, saw a 2.7% increase in spending year-over-year, compared to just 0.7% for lower-income households [7][9] - After-tax wage growth for higher-income households reached 3.7%, while lower-income households experienced only a 1.0% increase [7] Factors Influencing Spending Behavior - Gen X, despite being in their peak earning years and responsible for 27% of consumer spending, has seen spending growth slow to just 0.1% year-over-year [9] - Older households benefit from stable income sources such as Social Security and pensions, while younger households face higher costs for rent, childcare, and student loans, limiting discretionary spending [9][10] - Payment preferences vary, with older adults using cash for about 22% of payments, while younger adults prefer debit cards for smaller purchases and are more inclined to use buy-now-pay-later programs [11] Balance and Debt Behavior - Millennials and Gen X are managing peak family expenses, leading to higher average credit card balances, while younger cohorts have smaller balances due to lower credit limits and shorter credit histories [12]