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Credit Card Balances on the Rise for Millennials and Gen Z
Overview
Credit card balances are increasing across the board, but younger consumers, particularly Millennials and Gen Z, are experiencing the most significant spikes. According to Experian data, as of June 2024, Millennials’ average credit card balances have surged by 8.7% to $6,819, while Gen Z’s balances have grown by 8.2% to $3,407 annually. This growth outpaces that of older generations.
Factors Contributing to Increased Balances
Several factors contribute to the rising credit card balances among younger consumers. Entering adulthood often comes with substantial expenses, and the costs associated with this transition have escalated significantly over the past decade. These expenses extend beyond everyday items like coffee and encompass broader financial commitments.
Metro Areas with the Highest Increases
Experian has identified 12 metro areas where Millennials and Gen Z are experiencing the most significant increases in credit card balances. These areas are seeing younger consumers spend more than their counterparts in other parts of the U.S.
Average Credit Card Balance by Generation
| Generation (Age Range) | Average Credit Card Balance | Annual Increase |
|---|---|---|
| Generation Z (18-27) | $3,407 | +8.2% |
| Millennials (28-43) | $6,819 | +8.7% |
| Generation X (44-59) | $9,468 | +6.7% |
| Baby Boomers (60-78) | $6,798 | +3.0% |
| All Consumers | $6,699 | +5.2% |
Cities with Notable Increases
San Francisco and Honolulu top the list of cities where younger consumers have seen the most significant rise in credit card balances. These cities are known for their high cost of living, which likely contributes to the increased debt levels. Other cities on the list are experiencing rapid growth, both in population and economic activity, which also drives up spending and borrowing.
Young Spenders in Growing Cities
| Metro | 2023 Population | Population Growth (2020-2023) | Unemployment Rate (June 2024) |
|---|---|---|---|
| Lakeland, FL | 818,330 | +12.1% | 4.4% |
Impact of Inflation and Rising Costs
The pandemic has driven up costs in various categories, with some seeing increases approaching 30%. Housing costs, which now account for a third of a typical consumer’s spending, have risen significantly. Other expenses, such as car insurance premiums, also add to the financial pressure on younger consumers.
Impact of Inflation Since 2019
| Item | Increase in Cost (June 2019 to June 2024) | Current Percentage of All Consumer Spending |
|---|---|---|
| Food away from home | +29.7% | 5% |
Wage Growth and Future Outlook
Fortunately, younger workers are seeing larger wage increases compared to other age groups. With ultra-low unemployment levels, especially in high-growth metros, this trend is likely to continue, providing some relief against rising costs.
Contact O1ne Mortgage for Your Mortgage Needs
At O1ne Mortgage, we understand the financial challenges faced by younger generations. If you need assistance with mortgage services, call us at 213-732-3074. Our team is here to help you navigate your financial journey with confidence.
For more information on managing credit card debt and other financial tips, visit our website.
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