Generation Z credit-card debt soars 52% amid high inflation — but experts say that may not be a bad thing. Here's why.

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Generation Z credit-card debt soars 52%, but that may not necessarily be a bad thing. Here’s why.

The total credit-card balances for Gen Z consumers — those born between 1995 and 2003 — reached $55 billion in the second quarter, a 52% jump from $36 billion the same time a year ago, according to the data released Thursday by TransUnion TRU, a consumer credit-reporting agency.

Household debt climbed to $17.06 trillion, up just 0.1% from the previous quarter. This figure counts debts including mortgages, credit-card bills, car loans and student loans. Credit-card debt increased at the sharpest rate of all debt categories, researchers noted. In fact, Gen Z consumers might be better credit-card users compared to their predecessors, said Charlie Wise, senior vice president of research and consulting at TransUnion. They are engaging with credit more often, and also with more confidence and better performance, he said.

Consumers with prime credit are considered safe for lenders and creditors. About 50% of millennials had a less-than-prime credit score compared to 40% of Gen Z at the same age, the report found. The yearly rate of inflation, meanwhile, remains elevated. It rose to 3.2% in July from 3% in the prior month. It’s the first increase in13 months, though inflation has eased considerably since hitting a 40-year high of 9.1% in the middle of 2022. Consumer prices also rose 0.2% month-over-month in July.

 

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Credit Card Debt Reaches Record High of $1 Trillion, According to NY FedAccording to a study by the NY Fed, outstanding credit card balances have reached a record high of $1.03 trillion in the second quarter, up from $986 billion in the first quarter. The number of credit card accounts also increased by 5.48 million to 578.35 million, with the aggregate credit limit rising by $9 billion to $4.6 trillion. However, the study also found that delinquency rates for credit cards have slightly increased by 0.7%, the highest increase among all debt categories evaluated.
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