An alarming new report says that inflation-stricken Gen Z faces significantly higher debt burdens than Millennials did when they were their age.
The average credit card balance for Zoomers aged 22 to 24 in their prime years was $2,834 in the final quarter of 2023, compared to an inflation-adjusted average balance of $2,248 during the same period in 2013, according to the study. was. New data from credit reporting company TransUnion.
The 26% increase in average debt for Gen Z reflects rising food and housing prices, as well as a higher proportion of that age group graduating with student loans, the magazine said. . wall street journalfirst reported the data.
Economists say young people are more likely to default on credit card payments and ask family members for help because of their debt burden, while also delaying life milestones like homeownership and marriage.
“This generation is experiencing more financial stress than millennials did 10 years ago,” Charlie Wise, TransUnion’s global head of research, told Barron’s.
Lindsay Quackenbush, a Gen Z student, recently worked at a publishing company, where her salary paid her $60,000 a year. The 26-year-old was counting on the money to cover part of her rent for the New York City basement apartment she shared with her boyfriend.
However, she was recently laid off and now has balances of about $1,700 on three credit cards, the magazine reported.
According to the Journal, Quackenbush admitted for the first time in her adult life that she was unable to pay off her credit cards in full and had to opt for minimum payments while she looked for a new job. Ta.
Quackenbush said she had to put thoughts of marriage and children on the back burner until she was in a more financially stable position.
“Nobody knows when that will be,” she told the Journal.
Americans currently spend an average of one-third of their monthly salary on rent, averaging $1,987 per month as of January, according to online rental market Rent.
The median annual wage for new graduates in the U.S. in 2023 will be $60,000, slightly higher than the 2020 average of $58,858, an increase of 1.9%, according to the New York Fed.
Meanwhile, rents rose 22% over the same four-year period.
Scott Fulford, senior economist at the Consumer Financial Protection Bureau, told the Journal that about 33% of Americans rent their homes, and they tend to be young professionals or low-income households.
“Young people always have, on average, less wealth than other people,” Fulford said. “The last few years have been particularly complicated because rental inflation has been so high.”
According to the latest Consumer Price Index, which tracks changes in the cost of everyday goods and services, the All Items Index in March 2024 was 312.332, representing an increase in inflation of 3.5% on an annual basis.
In March 2020, this number was 257.971. This means that overall prices for daily living costs were on average more than 17% lower.
The Journal says that because of rising prices, young people in need are opening credit cards at a faster rate than older people.
Among people with open loans or lines of credit, Gen Zers are more likely to have at least one credit card than millennials a decade ago, according to a TransUnion report.
