Gen Z Sinks Deeper Into Debt

Inflation drives many to credit cards to cover costs, leaving them with bigger balances

By Oyin Adedoyin of The WSJ. Excerpts:

"'The average credit-card balance for 22- to 24-year-olds 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" [so that is up 26%]

"Younger people with higher debt are more delinquent on credit-card payments and need to rely on family for help if they lose their job, say economists and financial advisers. They also often delay life milestones, including homeownership and marriage, say the economists."

"The median annual wage for recent college graduates was $60,000 in 2023, little changed from $58,858 in 2020" [a 1.94% increase]

"The median rent in the U.S. was $1,987 as of January, a nearly 22% increase over the past four years"

"In 2021, credit companies loosened the qualifications for who could get credit cards and more people opened new accounts. Gen Z members opened new credit-card lines at a faster rate than other generations during the pandemic. Nearly 5% of consumers 27 or younger had opened at least one new credit-card account in March 2020"

"By March of this year, that figure had dropped to 3%."

"Of those with an open loan or credit line, Gen Z members were more likely to have at least one credit card compared with millennials a decade ago"

"Gen Z members also benefited from rising credit scores during the pandemic. The influx of cash from stimulus checks and fewer opportunities to spend money made it easier for consumers to pay down their debt and stay on top of their bills."

"As interest rates have climbed over the past two years, those credit scores have taken a hit. The drop was most drastic for millennials with credit scores between 660 and 719, whose scores fell by 26 points. Gen Z wasn’t far behind. The average credit-score change for Gen Z with credit scores above 720 fell 24 points during that time period"