By the time most financial institutions notice a generational shift in card behavior, the habit is already formed. The relationship that will matter most in ten years is being decided right now, in accounts that don’t look like the ones your rewards program was built around.
Our research found a divide sharp enough to demand attention. Among cardholders 65 and older, 78.1% carry a rewards credit card as their primary card. Among 18–24-year-olds, that figure is 11.8%, with 64.5% of that cohort primarily on debit instead.1 This isn’t a preference quirk. It’s a signal of where everyday card habits are forming, and for many financial institutions’ loyalty programs, they’re forming outside the rewards experience.
The Age Divide Isn’t a Preference Gap. It’s a Product Gap.
Stat: Only 11.8% of 18–24-year-old cardholders use a rewards credit card as their primary card, versus 78.1% of cardholders 65+.1
Implication: The next generation is building its everyday card habits outside the traditional credit rewards model, largely unrewarded.
Outcome: Institutions that extend meaningful rewards to debit have an opportunity to compete for the primary relationships of the next decade while those habits are still being formed.
This is the finding The Activation Gap surfaced at the aggregate level: three in four cardholders overall are rewards-driven in their card choice.1 But that average hides a generational split wide enough to change how a loyalty strategy should be built. A program calibrated entirely around credit-rewards behavior is calibrated around cardholders who already have the most entrenched habits. Those may not be the cardholders an institution most needs to win.
Debit Isn’t the Backup Plan. It’s Half the Wallet.
It would be easy to read the debit-primary finding as a temporary condition…something today’s 20-year-olds will grow out of once they qualify for better credit products. The broader payments data doesn’t support that read.
The Federal Reserve’s 2026 Diary of Consumer Payment Choice found that U.S. consumers now make close to the same number of debit and credit payments each month — 15 versus 16. Stated in-person preference has also converged to nearly even: 40% debit versus 38% credit.2 Debit isn’t a stopgap for cardholders without credit access. It’s roughly half of how Americans already choose to pay, not just a behavior confined to the youngest cardholders.
That reframes the debit-primary cardholder. They’re not outside the payments mainstream, waiting to graduate into “real” card behavior. They’re transacting through a channel a huge share of the market already prefers. If that channel carries no meaningful rewards, the institution risks leaving that relationship-building opportunity on the table.
The generational stakes compound the case. Gen Z’s global spending power is projected to reach $12 trillion by 2030, according to NielsenIQ’s Spend Z report, developed with World Data Lab. Mastercard has also cited the projection in its commentary on the cohort.3 A generation with that much future spending power is forming its card habits now, often on a payment rail many loyalty programs weren’t designed to reward. That’s not a niche segment problem. It’s a signal of where the next decade of card relationships is headed.
This Is a Relationship Fight, Not a Debit-vs-Credit Debate
The stakes get sharper once you look at how fragile “primary” institution status has become industry-wide. PYMNTS Intelligence and Velera documented that dynamic specifically among credit unions. Their July 2026 research found that 61% of members consider their credit union their primary financial institution. That’s well ahead of the 45% who say the same about digital banks and fintechs. Satisfaction runs even higher. Among credit union primary members, 87% report being very or extremely satisfied.4
And yet: credit unions convert only 48% of their members to top-of-wallet card status, compared to 69% for national banks. Trust and satisfaction, on their own, are not converting to everyday card usage. The same research found that 44% of credit union members cite rewards as a top reason for the card they use most. Among members who’ve already converted to top-of-wallet use, that figure drops to 32%.4 Read together, that gap is a map: rewards are disproportionately what’s still undecided. They matter most precisely among the cardholders an institution hasn’t won yet.
The broader banking relationship is loosening industry-wide, which raises the cost of standing still. JD Power’s 2026 U.S. Retail Banking Satisfaction Study found the average checking customer now maintains three deposit accounts across different institutions. It also found that 20% moved money away from their primary bank in the past three months, up from 17% the year before. Among customers under 40, that figure rises to 23%.5 “Primary financial institution” isn’t necessarily a fixed, defended position. It’s a relationship that has to be actively earned, especially with younger cardholders who are the most likely to be quietly shifting activity elsewhere.
What This Means for Your Program
The debit-primary cardholder isn’t a smaller version of the credit-rewards cardholder, waiting for a bigger card. They’re a different relationship, forming right now, largely without a loyalty mechanism attached to it.
Evaluate whether your youngest and debit-first cardholders have a meaningful rewards path today. If the answer is “not really,” the access gap isn’t a demographic detail; it’s a structural gap in where your program’s value actually reaches.
Treat debit rewards as relationship infrastructure, not a product line extension. The Federal Reserve data makes the case plainly: debit is not a secondary payment behavior. Rewarding debit creates another opportunity to deepen engagement with cardholders whose everyday payment behavior may otherwise sit outside the loyalty program.
Southland Credit Union built its debit rewards strategy around exactly this logic. It treated a rewards-enabled checking account as a growth lever for deposits and everyday engagement, not a feature bolted onto an existing product. Read how that played out.
The cardholders who will define your primary relationship base in 2035 are choosing their everyday card right now. The question worth sitting with is simple: when they do, is there a program on the other side of that choice, or just a debit card with no rewards attached?
The full findings are in The Activation Gap: The 2026 Cardholder Rewards Report.Methodology, behavioral archetypes, generational insights, and the complete preference breakdown from our research with 1,000 cardholders. |
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Sources:
1ampliFI Loyalty Solutions, The Activation Gap: What 1,000 Cardholders Told Us — The 2026 Cardholder Rewards Report (N = 1,000, fielded May–June 2026)
2Federal Reserve Financial Services, 2026 Diary of Consumer Payment Choice
3Mastercard, “How Gen Z Is Reshaping Digital Banking Expectations” (citing NielsenIQ, GfK & World Data Lab spending-power projection)
4PYMNTS Intelligence & Velera, The Top-of-Wallet Challenge: Why Trust Alone Is Not Enough to Drive Card Usage (July 2026 Credit Union Tracker)
5J.D. Power, 2026 U.S. Retail Banking Satisfaction Study