During a recent earnings call, Stephen Squeri, the CEO of American Express (Amex), revealed intriguing insights about the financial behaviors of younger cardholders, specifically those from Generation Z and the millennial demographic. Contrary to prevailing industry trends indicating increasing levels of credit card debt among younger individuals, Squeri highlighted that Amex's younger customers are exhibiting stronger fiscal responsibility. The average FICO score for these cardholders stands impressively at 750, alongside notably lower delinquency rates.

This information comes at a time when many financial experts have expressed concern over the escalating credit card debt among younger Americans. For instance, a report by TransUnion unveiled that individuals aged 22 to 24 are carrying an average credit card debt of $2,834, marking a staggering 26% increase compared to what millennials faced at the same life stage just a decade ago. Such statistics have contributed to a growing narrative of financial instability among younger generations.

Christophe Le Caillec, Amex's Chief Financial Officer, corroborated Squeri's findings by emphasizing that the average FICO score for Gen Z and millennial clients at American Express is 750. This statistic is particularly significant when juxtaposed with another Intuit Credit Karma study from February of the previous year, which indicated that about one in three Gen Z and millennials held subprime credit scores below 600. This data underscores a somewhat paradoxical trend: while many young people are becoming increasingly inclined to open additional lines of credit, their financial management appears to be more disciplined in the context of Amex's clientele.

Rich Franks, the head of Credit Karma's Light Box, previously discussed this phenomenon, noting that it is generally expected for young individuals to borrow extensively in the initial years of their careers. This borrowing pattern is currently evident among both Generation Z and millennials. Despite accumulating debt, these groups have emerged as significant contributors to American Express's overall business health.

Squeri noted that in the first quarter of this year, millennial and Gen Z customers accounted for more than 60% of new consumer accounts acquired globally, a statistic that is driving an increase in revenue from various fees. This positive trend demonstrates how these younger consumers are not only engaging with the brand but are also contributing to its financial success.

However, the financial behaviors of younger Amex cardholders differ from industry norms in several ways, particularly in their spending patterns and debt management. Squeri reported that millennials and Gen Z together represent approximately 35% of overall spending on their cards, with significant contributions coming from dining expenditures, thanks in part to Amex's robust rewards program for restaurants.

Interestingly, despite this substantial spending, Le Caillec pointed out that younger cardholders are still spending about 20% less compared to their older counterparts. Furthermore, these younger individuals demonstrate a lower tendency to carry debt, which is a crucial indicator of responsible credit management. In the credit industry, this practice of paying off the full balance each billing cycle is referred to as 'revolving less,' highlighting their commitment to maintaining a healthy financial stance.

As American Express continues to thrive amid evolving consumer behaviors, the companys leadership remains optimistic about the future. However, attempts to reach an Amex spokesperson for further comments regarding these trends yielded no responses.