Young American Express credit card holders are backing industry-wide trends regarding financial responsibility, according to Amex CEO Stephen Squeri.
Squeri said in a revenue call Thursday that the company surpassed Wall Street expectations. Millennials and Gen Z customers are “are significantly better than the industry, both from a FICO perspective and arrears perspective.”
Research shows that younger generations are earning credit card debt at a historic level. A Transunion survey showed that the average credit card debt between the ages of 22 and 24 was $2,834, an increase of 26% over millennials of the same age as 10 years ago.
Christophe Le Cailec, Amex’s Chief Financial Officer, said the average FICO score for Gen Z and Millennial clients is 750.
Last February, Intuit Credit Karma data found that one in three generations of Z and millennials had subprime credit scores of less than 600. This is linked to a growing willingness for younger generations to open more credit lines.
“It’s pretty normal for young people to borrow a lot early in their careers, and we’re certainly seeing what’s going on for now for Z and millennials,” Rich Franks, head of Credit Karma’s Light Box, previously told Business Insider.
Gen Z and millennials were the boons of Amex’s business.
“Like past quarters, millennials and Gen Z consumers account for more than 60% of new consumer accounts they acquired globally in the first quarter,” Squeri said in a revenue call that he increased his revenue from fees.
However, as mentioned by both the CEO and CFO, for younger Amex owners, what is the branching between Amex owners compared to other regions of the industry compared to other regions of the industry is how they use their cards and willingness to hold debt.
Squeri said the millennials and the Gen Z segment accounted for about 35% of overall spending. Part of that comes from restaurant spending as Amex offers a competitive point reward system for meals.
However, according to Le Cailec, “total” customers spend about 20% less than their older Amex counterparts, with millennials and Gen Z customers.
He added that they also spin a little. This is for the industry to pay back the balance on each billing cycle.
The financial health of young AMEX cardholders can be explained in part by the type of client the card attracts.
Amex’s lowest card service requires an annual fee of $95 after the first $0 fee of the first year. Companies like Chase and Citi offer cashback and no annual fees at the time of purchase.
An Amex spokesperson did not respond to requests for comment.