Your Loyalty Program Might Be Ignoring Your Best Customers

For decades, most loyalty programs were built around credit cards. That alignment made sense at a time when revolving credit was the primary lens through which loyalty and rewards were structured. But consumer payment behavior has changed, and Gen Z is making that shift especially visible.

EY finds that 69% of Gen Z use debit daily or weekly, while only 39% report frequent credit card use, compared with 51% of older generations. A recent U.S. News survey found that more than 20% of Gen Z say they never use a credit card, and 30% of Americans report avoiding getting one due to concerns about debt. Younger consumers are prioritizing spending within available funds rather than borrowing against future income. Yet loyalty systems remain anchored to credit spend, leaving millions of engaged consumers unrecognized by the very programs designed to build affinity.

This trend is no longer confined to Gen Z. Debit-first preferences are spreading across demographics, reinforced by rising consumer debt. According to the New York Fed, U.S. credit card balances climbed by $44 billion in Q4 2025 to $1.28 trillion, an increase of nearly 6% year over year. Loyalty programs that continue to center only on credit spending risk leaving out not just younger consumers, but a much broader share of the market.

Debit spend is typically smaller per transaction, but it shows up in everyday purchasing moments where loyalty is actually formed. Ignoring these patterns is a missed opportunity. Some brands are already adjusting. United Airlines, Wyndham Hotels & Resorts, and Southwest Airlines have all launched a debit rewards card in the last year, removing credit checks and rewarding spend directly from a customer’s account. It’s an early indicator of how loyalty is evolving.

The legacy model of tying loyalty primarily to credit emerged when card networks made it simple to track spend and deliver perks at scale. In practice, that model treated borrowing capacity as a proxy for loyalty, even though loyalty is built through repeated use, relevance, and trust.”

Today, the technical barriers to debit-linked loyalty are significantly lower than they once were. API-driven platforms now make it possible to connect rewards to any form of payment—credit, debit, prepaid or mobile wallet—in real time. Brands don’t need to become banks to deliver this experience. But they do need to think more broadly about how financial tools fit into the customer journey.

The opportunity is bigger than many loyalty teams may realize. Credit cards account for about 35% of U.S. consumer payments by number, while debit cards account for roughly 30%, according to the Federal Reserve’s 2025 Diary of Consumer Payment Choice. For Gen Z in particular, debit plays an outsized role in everyday spending, with 42% of grocery transactions running on debit. When routine spend goes unrewarded, brands miss some of the most consistent opportunities to build connection and habit. With Gen Z still forming long-term brand preferences, inclusive loyalty strategies carry lasting implications.

Of course, loyalty isn’t measured by spend alone; it’s measured by engagement frequency, emotional connection, and perceived belonging. Expanding rewards to include debit reinforces that customers are valued for how they choose to pay, not just how much.

Loyalty is sustained by trust. As consumers gain more choice in how they pay, programs that recognize real behavior rather than legacy structures will define the next era of loyalty.