With the Great Recession growing farther away in the economic rearview mirror, it appears that millennials are once again coming around to the idea of utilizing credit cards.
Millennials are practical about their credit card rewards. They’re looking for rewards that will be worth their time. The target of their obsession: travel points.
In an analysis of online consumer discussion among millennials, PaymentsJournal found that 90% of credit card point discussion involved travel rewards.
Why this emerging trend?
Here are six reasons millennials are now favoring travel rewards credit cards:
Reason No. 1: Valuing Experiences Over Material Goods
There’s a millennial shift in spending, and it comes down to priorities: Millennials seem to value buying experiences rather than material goods. One Eventbrite study saw a majority of millennials preferring to spend money on “experience-related purchases.”
When it comes down to buying experiences, travel is seen as one of the top ways to enhance one’s experiences and lead a richer, fuller life.
For that reason, millennials are looking to travel—and a credit card that can help them along that journey will naturally be more appealing. Not only are the rewards beneficial in everyday life, but also credit cards that make the traveling experience more appealing will end up high on many millennials’ lists. Millennials know they have to spend money on regular expenses—if they can also get travel rewards out of these regular expenses, then they perceive that credit card as helping them find those rich experiences.
Reason No. 2: Millennials are Already Traveling
When acquiring a credit card and choosing it on the basis of reward points, it only makes sense to utilize a card that will provide rewards the consumer will happily use. If millennials are already making travel a priority, then acquiring a travel rewards card is a great decision.
Are millennials a travel-happy bunch? According to an MMGY survey, millennials intended to travel an estimated 35% more in 2017. With strong economic news backing them in 2017, millennials were able to put their money to work in generating fresh experiences in the form of travel—and those already holding cards with travel rewards saw expenses only help fuel further experiences down the line.
Reason No. 3: Millennials are the ‘Wanderlust Generation’
BCG found millennials are 23% more likely to travel to an international destination when compared to older generations. They're also more willing to budget for additional trips.
Millennials have built up a steady habit of traveling—and those who are already spending a lot of time on the road—either out of “wanderlust” or necessity for work—need credit cards that can make their lives on the road more convenient.
Reason No. 4: Traveling is Getting Easier
Millennials have no problem embracing new technology trends. The success of Uber and Airbnb are testaments to that. As technology improves, so does the infrastructure necessary to make world travel easier and more convenient. Airbnb has made it possible for adults across generations to enter private arrangements for living spaces, making it easy and simple to book accommodations for world travel. As travel gets easier, it becomes more commonplace—which in turn fuels demand for travel reward credit cards that can help foot the bill.
Reason No. 5: Millennials Are Combining Business and Leisure Trips
Business trips without leisure aren’t very fun—and millennials aren’t the first generation to notice that fact. Now the word “bleisure” has entered the lexicon, thanks to the combination of a business and leisure trips. Combining both not only makes travel much more commonplace, but can encourage generations like millennials to further seek out travel rewards cards in the first place.
Travel rewards can facilitate this by offering more than airline miles. Free room upgrades, hotel credits and other business travel rewards can help expand the average business trip into a “bleisure” activity. This is as true for millennials as it is for any individual who enjoys travel. Those who already know that they’re going to spend many of their credit card rewards on travel-related expenses can seek out credit cards that optimize these rewards in advance.
Reason No. 6: Traveling Frequently Increases the Benefits
Many personal finance experts might recommend strictly cash back rewards for those who don’t travel often enough. In the case of millennials, however, frequent travel does justify the use of travel rewards rather than general cash back rewards.
The increased frequency of travels among millennials only figures to expand as millennials age and earn larger wages. With those wages and increased travel, not only will millennials earn more travel points, but they’ll find plenty of occasions to use them.
Maxime Rieman is Product Manager at ValuePenguin. Educating and assisting shoppers about financial products has been Rieman's focus, which led her to joining ValuePenguin, a consumer research and advice company based in New York. Previously, she was product marketing director at CoverWallet and launched the personal insurance team at NerdWallet.
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