Gen Z Australians turning away from credit cards for BNPL

A new report has highlighted a marked decline in the popularity of credit cards among young Australians, with growing numbers turning to pay-over-time services and debit cards.

Research conducted by Morning Consult for the buy-now-pay-later (BNPL) platform Afterpay surveyed 20,000 people globally, including more than 4,300 adults from Australia, and found that dissatisfaction with credit cards is strongest among Generation Z.

According to the findings, 56% of Gen Z respondents in Australia report that credit cards give them "the ick", representing the highest rate among all countries surveyed, including the United States, Canada, the United Kingdom, and New Zealand.

The same report found that 84% of Australians overall consider credit cards to be "financially dangerous," and that these views are particularly prevalent among younger adults. More than three-quarters of Gen Z respondents (76%) said credit card bills make them feel anxious or stressed.

The cost-of-living crisis appears to be compounding the situation. While four in five Australians say they create budgets to manage their shopping expenses, the report notes that three-quarters still find it difficult to keep to those budgets. Gen Z is especially affected, with nearly four in 10 (38%) stating they have less than AUD $800 set aside for emergencies. Among Gen Z women, almost half (47%) are unable to cover such an emergency expense, compared to 27% of Gen Z men.

The report identifies high interest rates and complex card terms as significant factors contributing to Gen Z's aversion to credit cards. Half of millennial respondents and 39% of Gen Z have been surprised by the amount of interest incurred on their credit card bills. Additionally, 63% of Gen Z admit to having trouble fully understanding credit card terms, while over one in five Gen Z credit card holders owe AUD $8,000 or more in credit card debt.

Sentiment is shifting further, with three in 10 Australians saying their view of credit cards has worsened in the past year. This trend is accompanied by a noticeable move towards payment alternatives that promise more transparency and control. According to the report, debit cards are now the most popular payment method for Gen Z (75%) and millennials (76%), while credit cards are the least used method among these cohorts.

The research also indicates a voluntary exodus from credit cards: 57% of Australians who have previously owned a credit card have since switched to another payment method. In tandem with this, BNPL platforms such as Afterpay are experiencing growing popularity—more than half of Australians (53%) are open to using BNPL in the future, and a significant proportion of Gen Z and millennials already use such services at least weekly.

The report summarises consumer preferences, stating, "The findings from 'Why Credit Cards Give Gen Z the Ick' underscore a broader shift towards financial tools that prioritise transparency, accessibility and flexibility. Consumers are re-evaluating their relationship with traditional forms of credit, seeking payment methods that empower them to manage their finances without the burden of emotional stress."

Afterpay attributes the trend partly to features that differentiate BNPL from traditional credit cards. The company said, "Afterpay is at the forefront of this shift, offering a transparent way to pay, without the stress of compounding interest rates and opaque terms and conditions. Afterpay's pay-over-time model gives customers control over their spending and enables them to manage their spending on their terms, and ultimately take charge of their own financial future."

The survey for the report was conducted online in February 2025 involving Australian adults aged 18 or over. The data were weighted for age, gender, education, ethnicity, and region to achieve national representation. The results have an overall margin of error of plus or minus 1%, with larger error margins for subgroups.