"Using a Phone with a Cracked Screen, How Do I Look?"... Frugality That Became a Boast, Not Misery [Youth Report]

Check Card Issuance Rebounds This Year
Tendency to Restrain Excessive Spending
Used Cars and Convenience Foods Gain Popularity Over Imported Cars and Dining Out ↑

Recently, more people are choosing debit cards over credit cards. Debit cards have the advantage of preventing impulsive or excessive spending since payments cannot be made if there is no balance in the account. Additionally, the tax deduction rate is higher than that of credit cards, leading many thrifty consumers to apply for debit cards. Just a few years ago, young people pursued 'YOLO' (You Only Live Once) and tended to overspend. However, recently, as the high inflation and high interest rate situation has prolonged, the 'YONO' (You Only Need One) trend, which encourages refraining from unnecessary purchases, seems to be rapidly emerging.

MZ Generation Switching to 'Debit Cards' Due to Concerns Over Overspending

The number of debit card issuances had steadily declined over the past few years but rebounded this year. According to data released by the Credit Finance Association in September, as of the second quarter of this year, the number of debit cards issued by eight major card companies (Shinhan, Samsung, Hyundai, KB Kookmin, Lotte, Hana, Woori, BC) increased by approximately 928,000 compared to the same period last year, reaching 62,369,000 cards. During the same period, usage amount also increased by about 460.5 billion KRW, totaling 27.5537 trillion KRW.

This appears to be due to more ordinary people choosing debit cards over credit cards as their financial situations become tighter. With ongoing high inflation, more people are restraining excessive spending and aiming to spend only what they earn.

Mr. Lee (28), an office worker who mainly uses debit cards instead of credit cards, said, "I used a debit card when I was a university student, but after becoming an office worker, I got a credit card." He added, "At first, I was satisfied because credit cards offered more benefits than debit cards, but gradually I started overspending without thinking about the future, so I eventually went back to using a debit card." Mr. Lee further explained, "Credit cards have installment plans, so you end up buying things you don't really need. Debit cards have a limited amount, so you only buy what you need."

In fact, many people use debit cards out of concern for overspending. According to a survey conducted by the credit card platform Card Gorilla on the reasons for using debit cards, 36.8% of respondents cited 'concern over overspending' (36.8%, 1,231 votes) as the main reason for using debit cards. The second most common reason was 'to maximize year-end tax deductions' (17.5%). The third and fourth reasons, with a narrow margin, were 'enabling planned spending' (15.8%) and 'low annual fee burden' (15.8%), respectively. The survey was conducted over about three weeks from the 1st to the 21st of last month among visitors to the Card Gorilla website, with a total of 3,347 participants.

'YOLO' Is a Thing of the Past... 'YONO' Trend of Buying Only Necessary Items Dominates

Since the late 2010s, the consumption trend among the 20s and 30s generation was 'YOLO.' It meant not sparing money and time for current happiness but carried a nuance of indulging in luxury beyond one's means. However, recently, the practical consumption trend 'YONO' has been rising. This refers to a consumption behavior where only necessary products are purchased, and unnecessary purchases are restrained.

As consumption patterns change, the items purchased by young people have also changed. According to an analysis of financial transactions of 32 million individual customers by NH Nonghyup Bank, the number of luxury car purchases by the 20s and 30s generation in the first half of this year decreased by 11% compared to the previous year. On the other hand, used car consumption increased by 29% during the same period. The trend of 'Omakase' meals costing 100,000 to 200,000 KRW per meal has also become a thing of the past. Buffet consumption by the 20s and 30s generation in the first half of the year decreased by 4% compared to the same period last year, and Western cuisine dining out decreased by 8%. Conversely, consumption of ready-made meals by the 20s and 30s generation at Nonghyup Hanaro Mart increased by 21% compared to the same period last year. This is nearly double the increase rate (11%) of ready-made meal consumption among other age groups.

Globally, Trend to Reduce Overspending... 'Low-Spending Core' Rising in the U.S.

Pixabay

The 'YONO' trend is not only seen domestically. In the United States, the 'Low-Spending Core' is rapidly emerging, centered on Gen Z, born from the mid-1990s to the early 2010s. They not only reduce consumption but also boast about their low spending on social networking services (SNS). Broken-screen smartphones, laptops over ten years old, old furniture, and vintage clothing are not seen as shabby items on SNS but as points of pride.

The New York Post described the 'Low-Spending Core' culture popular among young people as "a product of inflation." Additionally, CNN, in an article titled 'YOLO Is Dying' published last June, stated, "Consumer spending is decreasing, and even high-income Americans are turning to discount stores like Walmart," adding, "Some stores are lowering prices to attract hesitant shoppers."