Yan Bowen’s only attempt to get a credit card came during her first year at university. The bank rejected her because she had no income, reinforcing her belief that cards were meant for “people with stable incomes.”

Then, at 22, she found herself in debt anyway.

Last October, she realized she owed around 3,000 yuan ($400) — more than her entire monthly student allowance. With the debt weighing on her, she cut daily expenses, took on part-time work, and borrowed from friends to pay it down.

The debt had built up through apps she used every day to order takeout, buy groceries, and shop online, each offering the option to pay later or split purchases into installments.

Even so, Yan sees the relatively low limits on app-based credit as a safeguard against getting in too deep. “It keeps the risk manageable, nothing big enough to shock my parents,” she said. “A credit card would just mean higher risk.”

That wariness extends well beyond Yan. By the end of March 2026, China had about 687 million credit and combo cards in circulation, down roughly 120 million from their 2022 peak, according to central bank data.

Yan is one of 12 people aged 20 to 26, including students, job seekers, and office workers, whom Sixth Tone interviewed in July. Of them, nine had never owned a credit card. Many knew little about how cards worked and worried most about missing repayments. The few who did use cards tended to do so for specific reasons, such as overseas travel or managing cash flow.

More than 60 credit card subcenters closed across China in 2025, according to state-run People’s Daily, while some banks folded their card businesses and standalone apps into broader retail operations.

Yet outstanding balances on bank cards have remained relatively stable, said Jiang Jiajun, an associate professor at Fudan University’s School of Economics, in Shanghai. That suggests many of the cards being canceled were dormant rather than evidence that consumers had stopped borrowing. Even so, he said, “at least from the data, there is a clear trend of people avoiding credit cards.”

The traditional selling points — higher limits, longer interest-free periods, and richer rewards — may simply matter less to younger consumers. Those perks “are not necessarily what Gen Z cares most about,” Jiang said.

Yan’s first encounter with borrowing came through a food-delivery coupon. During her sophomore year, Chinese delivery app Meituan offered her a discount worth less than 1 yuan, but only if she activated its pay-later service. She did.

Before long, she had signed up for Huabei, a credit service inside Ant Group’s Alipay payment app, and Baitiao, a similar product from e-commerce giant JD.com. “They’re just so easy,” Yan said. “Even when traveling, hotels let you stay first and pay later.”

Even with enough money in the bank, Yan sometimes chose to pay later or in installments rather than watch her balance fall. Small debts piled up across different apps, and she often did not know the total until the monthly bill came due.

Her biggest current debt comes from a 6,500-yuan laptop. To be eligible for a student discount, Yan had to pay through Baitiao, so she split the cost into six monthly installments of more than 1,000 yuan. As of Aug. 5, she still owed more than 5,600 yuan.

Unlike credit cards, which require a separate application, app-based credit is built directly into services young consumers already use, often with lower limits and fewer steps between browsing and borrowing.

Jiang said the difference comes down partly to “mental accounting” — the way people sort spending into different mental buckets. Small, frequent purchases through apps like Huabei can feel like part of a “convenient lifestyle” rather than “financial debt.” Credit cards, by contrast, make the borrowing harder to ignore.

“They make users acutely aware that they are borrowing money, which naturally triggers resistance,” Jiang said. “These two things sit in completely different mental accounts for young people.”

For some young consumers, credit cards begin to look more useful as purchases get bigger and finances more secure.

Wang Xuanren, 23, works in finance in the eastern city of Nanjing and applied for her first and only credit card in 2024 ahead of an overseas trip. She already had more than 500,000 yuan in a fixed-term deposit at the bank, helping her secure approval the same day; the card arrived five days later.

She now saves it largely for electronics and luxury goods. For big-ticket purchases, Wang said installments can turn a 40,000- or 50,000-yuan expense into much smaller monthly payments, automatically deducted from her debit account.

“I keep a lot of cash on hand,” she said. “Using a credit card interest-free is basically borrowing someone else’s money and paying it back later.”

Zheng Yuxin, a 21-year-old university student in Shanghai, is far less comfortable with that bargain. She has no plans to apply for a credit card or use app-based credit anytime soon. “Nothing in life is free,” she said.

Even generous sign-up bonuses make her wary. Credit cards feel “very distant and risky,” she said. “I worry about falling for a scam because I can’t tell what’s real.”

In 2023, Zheng activated Huabei after agreeing to an authorization screen and completing facial verification. It then became her default payment method, allowing later purchases to be charged through the service without her actively choosing it each time.

She realized what had happened only when roughly 100 yuan was deducted from her bank account on repayment day. “Seeing unexpected money disappear gave me this empty, unsettled feeling,” she said. Since then, she has stuck to a simpler rule: buy only when she already has the money.

From Sept. 30, China will require a clearer separation between paying and borrowing online. Non-bank payment providers will no longer be allowed to present loans as payment options or market lending products through their payment services, with companies required to adjust their practices before the rules take effect.

Jiang said such rules should make borrowing more transparent and give users clearer warnings before they take on debt. The goal, he said, is not to eliminate app-based credit, but to make sure consumers know when an ordinary purchase has become a loan. “This protects consumers and helps platforms earn long-term trust,” he said.

Those preferences may change with age. Higher incomes, more travel, and larger spending needs could eventually make the higher limits and longer interest-free periods of credit cards more useful. “The same group of people might develop completely different habits 10 years from now,” said Jiang.

Zhang Xinyun, 24 and from the northeastern city of Harbin, is currently unemployed and remains deeply wary of credit cards after watching a relative struggle with card debt when she was a teenager. “Spending ahead always comes with bad temptations,” she said. High limits look more like added risk than freedom, and sign-up gifts do little to reassure her.

But Zhang can imagine her needs changing. Once she starts working or running a business, she said, a card could become useful for managing cash flow or traveling overseas.

Jiang underscores that banks cannot rely on that change happening on its own. “They need to improve convenience, embrace fintech, and create use cases that resonate with younger consumers.”

At the bank where Zhao Wei works in the northeastern city of Shenyang, signing up new credit card users is part of the job. She is expected to bring in dozens each year and, last year, even opened her own first card partly to help meet the target.

Many customers worry about missing repayments and damaging their credit records, Zhao said. Others simply see little need for a card when mobile payments and app-based credit are already woven into daily spending through digital services such as WeChat Pay, Alipay, and Huabei.

Banks have responded with incentives. Zhao’s gives new cardholders 150 yuan in spending credits, along with gifts ranging from rice and cooking oil to household appliances. Elsewhere, welcome offers can include health checkups, airport lounge access, fuel vouchers, coffee coupons, and cash back on purchases.

Zhao is blunt about how far such incentives can go. “People who are put off by credit cards won’t open one just for that,” she said.

More recently, her bank began offering customized cards printed with customers’ pet photos, along with discounts on pet supplies.

Even that has not made Zhao optimistic. “Credit cards are being squeezed by more convenient products,” she said. “If they can’t build stronger ties to daily life, becoming obsolete is not impossible.”

Editor: Apurva.

(Header image: VCG)