Inflation-battered Gen Zers face a debt load that is significantly higher than millennials carried when they were their age, according to a troubling new report.
The average credit-card balance for 22- to 24-year-olds — the prime age for Zoomers — was $2,834 in the last quarter of 2023, compared with an average inflation-adjusted balance of $2,248 in the same period in 2013, according to new data from Credit bureau TransUnion.
Gen Z’s 26% increase in average debt reflects a surge in prices for food and housing, coupled with a larger percentage in that age group who graduated with student loans, according to The Wall Street Journal, which first reported on the data.
Because of their debt burden, economists say younger people are more delinquent on credit-card payments and are more likely to rely on their family for help — while likely delaying life milestones such as homeownership and marriage.
“This is a generation that is feeling financial stress in a more acute way than millennials did a decade ago,” Charlie Wise, head of global research at TransUnion, told the Journal.
Gen Zer Lindsay Quackenbush was recently working for a publishing company that paid her $60,000 a year — which the 26-year-old relied on to cover her portion of rent in a New York City basement apartment she shared with her boyfriend.
However, she was recently laid off and now carries a balance of roughly $1,700 across three credit cards, the Journal reported.
For the first time in her adult life, Quackenbush admitted that she’s not able to pay off her credit cards in full, and has to opt for the minimum payment while searching for a new job, per The Journal.
Quackenbush said she’s had to put thoughts of marriage and children on the backburner until she’s in a more financially stable position.
“Who knows when that will be?” she told The Journal.
Americans now spend an average of one-third of their monthly paycheck on rent, which averaged $1,987 per month as of January, according to online rental marketplace Rent.
The median annual wage for a recent college graduate in the US was $60,000 in 2023 — slightly above the 2020 average of $58,858, according to the Federal Reserve of New York — a 1.9% increase.
Rent, meanwhile, soared 22% in the same four-year period.
About 33% of Americans rent their home — and they tend to be young professionals or lower-income families, Scott Fulford, a senior economist at the Consumer Financial Protection Bureau, told The Journal.
“Young people always have low wealth on average compared to everybody else,” Fulford said. “The last several years have been particularly complicated because rental inflation has been so high.”
According to the latest Consumer Price Index — which tracks the changes in the costs of everyday goods and services — the all-items index for March 2024 was 312.332, marking a 3.5% rise in inflation on a yearly basis.
In March 2020, that figure was 257.971, meaning prices, on average, were more than 17% less across day-to-day living expenses.
Because of blistering prices, squeezed youngsters have opened credit cards at a faster rate than their older counterparts, according to The Journal.
Of those with an open loan or credit line, Gen Zers were more likely to have at least one more credit card compared with millennials a decade ago, per TransUnion’s report.
