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Debt for Gen Z consumers is rising and can have long-lasting effects, The WSJ reports.
The rising debt reflects a surge in inflation for younger Americans at the start of their careers, coupled with a higher percentage of Gen Z graduates carrying student loans.
The average credit card balance for 22- to 24-year-olds was $2,834 in 2023, compared to $2,248 in 2013, according to data from TransUnion.
Younger people with higher debt may often be delinquent on credit card payments and delay owning homes and reaching other life milestones.
The median annual wage for recent college graduates was $60,000 in 2023, compared to $58,858 in 2020, according to the Federal Reserve of New York.
At the same time, rent has increased significantly. The median rent in the U.S. was $1,987 as of January, a nearly 22% increase over the past four years.
Credit card companies loosened the qualifications of those who could get credit cards, and more people opened new accounts. Gen Z members opened new credit card lines faster than other generations during the pandemic. That number dropped from 5% in March 2020 to 3% in March 2024.
As interest rates have climbed over the past two years, credit scores have declined. The drop was most drastic for millennials with credit scores between 660 and 719, whose scores fell by 26 points, according to Credit Karma. Gen Z’s average credit score change with credit scores above 720 fell 24 points.
