The latest batch of young adults in the United States is increasingly relying on credit compared to the previous generation, and experts anticipate this trend worsening amid ongoing high inflation rates.
According to a recent report by TransUnion unveiled on Wednesday, Gen Z adults aged 22 to 24 are exhibiting higher rates of credit card usage, debt accumulation, and delinquencies compared to millennials at the same age range a decade ago.
Titled “Solving for Gen Z,” the report highlights that in 2023, 84% of credit-active consumers aged between 22 and 24 held one or more credit cards, a significant increase from 61% in 2013.
Furthermore, Gen Z individuals are more inclined to take out auto loans than millennials were a decade ago, with 30% of Gen Zers opting for auto loans compared to 25% of millennials.
The report attributes these trends to a 32% cumulative rise in the consumer price index (CPI) over the past decade, alongside increased debt levels across all age groups. Notably, credit card debt among Americans surpassed $1 trillion last year.
TransUnion highlights that the combination of soaring prices and escalating credit card balances is leading Gen Z consumers to carry higher balances across other credit products, such as auto loans, which have seen a 14% increase for this generation compared to inflation-adjusted figures from a decade ago.
Jason Laky, Executive Vice President and Head of Financial Services at TransUnion, emphasized that younger consumers, facing a higher cost of living relative to previous years, are turning to credit products to address their financial needs. He noted that as long as inflation remains elevated and the cost of goods continues to rise, balances across various credit products are likely to keep growing.
