Generation Z has emerged as a noteworthy player in the credit card debt arena, outpacing previous generations in the race to accumulate balances, while Generation X claims the crown for holding the highest average credit card debt.
Credit and Gen Z
During the second quarter of 2023, which covers April to June, individuals from Generation Z, those born between 1997 and 2012, had an average credit card debt of $3,328. This reflected a significant 4.23% increase compared to the previous quarter, from January to March 2023, when their average balance was $3,193.
Dr. Balbinder Singh Gill, an assistant professor of finance at the esteemed School of Business at Stevens Institute of Technology, articulated, “I think that’s the effect of COVID. I think Gen Z was able to spend more on things like electronics, computers, and streaming services, while older generations’ spending patterns decreased.”
The same Credit Karma data reveals that while the second quarter of this year witnessed the most substantial increase in card debt among Generation Z, this generation paradoxically carries the least amount of debt when compared to their older counterparts.
Gen X / Baby Boomers
Among the generations, Generation X, comprising those born between 1965 and 1980, maintains the highest average credit card debt. In the timeframe spanning from April to June, they showed an average balance of $9,589, signifying a 1.89% increase from the previous quarter.
In the credit card debt rankings, Baby Boomers, born between 1946 and 1964, secured the second position. They carried an average debt load of roughly $8,192 during the second quarter.
Dr. Gill offered insights into the contrasting spending habits among different generations, stating, “Baby Boomers and the Silent Generation are outspending their younger counterparts in leisure spending.”
However, the story takes a different turn for Millennials and Generation Z. Over the same two-year period, these younger generations experienced a significant surge in credit card debt, increasing their balances by 26.2% and an astonishing 174%, respectively.
As the economic journey unfolds, only time will tell how these trends will shape the generations’ financial futures.
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