Younger American Express credit card holders are bucking industrywide trends regarding fiscal responsibility, said Amex CEO Stephen Squeri.
Squeri said during an earnings call on Thursday, in which the company surpassed Wall Street expectations, that millennial and Gen Z customers are “performing significantly better, both from a FICO perspective and from a delinquency perspective, than the industry.”
Studies have shown that the younger generation is racking up historic levels of credit card debt. A study by TransUnion showed that the average credit card debt held by 22- to 24-year-olds was $2,834, a 26% increase over millennials when they were the same age a decade ago.
Christophe Le Caillec, Amex’s Chief Financial Officer, said the average FICO score of its Gen Z and millennial clients is 750.
In February of last year, Intuit Credit Karma data found that one in three Gen Z and millennials had a subprime credit score below 600. This is coupled with the younger generation’s increasing willingness to open up more lines of credit.
“It’s fairly normal for young people to borrow a lot during the early years of their careers, and we certainly see that happening right now with Gen Z and millennials,” Rich Franks, head of Credit Karma’s Light Box, previously told Business Insider.
Gen Z and millennials have been a boon to Amex’s business.
“As in past quarters, millennial and Gen Z consumers made up over 60% of new consumer accounts acquired globally in Q1,” Squeri said during the earnings call, driving up revenue from fees.
But where the trend diverges for younger Amex holders compared to the rest of the industry is how they use their cards and their willingness to hold onto debt, both the CEO and the CFO said.
Squeri said the millennial and Gen Z segments comprised about 35% of overall spending. Part of that comes from restaurant spending, since Amex offers a competitive point rewards system for dining.
But, according to Le Caillec, millennial and Gen Z customers “combined” still spent about 20% less than their older Amex counterparts.
He added that they’re also revolving a bit less, which is industry-speak for paying off their balance in full each billing cycle.
The financial health of younger Amex cardholders could be partly explained by the type of clients the card attracts.
Amex’s lowest card offering requires a $95 annual fee after an initial $0 fee for the first year. Firms like Chase and Citi offer cards with cash back on purchases and no annual fee.
An Amex spokesperson did not respond to a request for comment.
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