Why Cash Back Cards Are the Top Choice for Boomers and Gen Z

With decades in between the two generations, there's a lot that baby boomers and Gen Zers may not agree on. But when it comes to spending habits, there's something both groups can agree on: Cash back credit cards are the way to go.

A credit card survey by The Motley Fool Ascent revealed that over 50% of individuals in each generation reported owning at least one cash back credit card, surpassing all other card types.

But why are these cards more popular than rewards, travel, or store credit cards? The answer is that cash back credit cards provide a variety of benefits and options.

Why Gen Zers and baby boomers cash in on cash back cards

Baby boomers and Gen Zers appreciate that cash back cards provide a flat percentage cash back reward on all purchases or varying percentages for specific bonus categories.

According to the survey, some boomers and Gen Zers specifically search for cards that offer competitive cash back rewards compared to other cards. In fact, 1 in 10 baby boomers will rule out a card if its cash back rewards are not competitive enough, while 7% of Gen Z consumers do the same.

But while both generational groups prefer cash back cards, the reasons for getting a credit card differ significantly. Nearly half of all Gen Z respondents said they got a card to build their credit, while baby boomers mainly chose a card to access more credit. 

The benefits of cash back cards 

I'm not a Gen Zer or a baby boomer, but I've used a cash back card for many years. I like to know that when I use it, I automatically earn a little cash back, no matter what store I'm at or where I shop online.

If you're considering cash back cards, or you're just wondering why they're one of the most popular credit cards, here are a few reasons:

• You earn cash on everyday purchases: Cash back cards typically offer rewards on all purchases, including groceries, gas, and eating out. The main draw is that you earn cash on things you buy anyway.
• You can use the cash however you want: Cash back cards offer the most flexibility in using your rewards. You can use the money to pay down your credit card balance or cash the money out and put it directly into your bank account.
• Cash back cards usually don't have an annual fee: There are many cash back cards with no annual fee. This is great if you want a card with rewards but want to avoid committing to one that you have to pay for to get the benefits.

One way to decide which card to choose 

Although cash back cards don't require you to use them at specific locations to earn rewards, there are benefits to choosing a card that matches up with where you shop most. 

For example, my family buys a lot on Amazon, and we have a Prime membership, so I got a Prime Visa several years ago. I get 5% cash rewards on every Amazon purchase I make, and you can earn the same percentage for Whole Foods purchases, too. 

For purchases at restaurants and gas stations, I get 2% cash rewards and 1% for all other purchases. There's also no annual fee, which I like. 

It's always a good idea to compare different credit cards to find the one that fits your needs and spending habits the most. Taking the time to shop around before committing to a card can help you avoid later regrets and ensure you're getting the best possible rewards.