It’s time for Gen Zers to check their spending habits. A new report found that this generation is accumulating credit card debt faster than any other generation.
Credit Karma analyzed data from 78.2 million users, spanning from the Silent Generation to Gen Z. On average, everyone’s credit card debt is expanding. The average credit card debt for millennials rose 29 percent from the previous year to $5,800. But Gen Z experienced a 40 percent increase from one year earlier, bringing their average credit card debt of $2,781.
It’s not just credit card debt that’s concerning. Gen Z also saw the highest increase in average total debt, with an accumulation of $16,283 over the last quarter of 2022 — a three percent increase over the three months to May 2022. This trend is particularly troubling because while Gen Z has the smallest amount of total debt among all generations, they are the only generation to see an increase in past-due accounts. This includes overdue credit card, mortgage, student loan, medical loan, auto lease or auto loan accounts by more than 30 days.
Gen Z and younger millennials in particular struggle with paying off their debt due to a general avoidance of their finances. The Credit Karma study found that 28 percent in each of those generations said they often or always feel a sense of financial dissociation, compared with 4 percent of baby boomers or older Americans.
“Our culture is really big on overconsumption. We’re constantly spending on things just to self-soothe,” Alexis Howard, a financial adviser at Mariner Wealth Advisors, told The Wall Street Journal.
Abigail Sussman, a professor of marketing at the University of Chicago’s Booth School of Business, said that younger generations also may avoid dealing with finances because budgeting can make them feel helpless.
“If you feel like you’re really behind, then budgeting also is a reminder of how behind you are,” she said. “If you set goals that are too high, it can be demotivating.”