The new
“Gen Z consumers have seen their finances significantly impacted by the pandemic and its aftermath, even more so than the challenges faced by Millennials as a result of the Global Financial Crisis,” said
The study2, which included analysis of recent credit data for Gen Z consumers as well as credit data from 10 years ago for Millennials, found that Gen Z borrowers are opening more credit lines and have both higher debt levels and delinquency rates compared to Millennials at the same age. Yet, Gen Z borrowers also are performing in a similar manner to younger generations of the past in comparison to older generations (i.e. younger generations typically have higher delinquency rates as a group than older ones). The study found that 84% of credit-active Gen Z consumers had at least one credit card (bankcard) as of Q4 2023. This is significantly higher than the 61% of credit-active Millennials who had at least one card 10 years prior. This comes as nearly 36% of Gen Z consumers ranked credit cards as the most useful credit product, up from 29% of Millennials a decade ago.
Gen Z Consumers Are Using Bankcards and Auto Loans More than Their Millennial Counterparts Did At the Same Age 10 Years Prior
Product Penetration Among Credit-Active Consumers
Millennial 22-24 Year Olds in Q4 2013 | Gen Z 22-24 Year Olds in Q4 2023 | |
Credit Card ( | 61% | 84% |
Credit Card (Private Label) | 44% | 26% |
Student Loan | 49% | 34% |
Auto | 25% | 30% |
Personal Loan | 5% | 5% |
Source:
Increased card usage comes amidst elevated inflation
The increase in card usage among Gen Z consumers is not necessarily unique to this demographic, as consumers as a whole have been using credit cards more to manage the significant and enduring growth in inflation over the past decade, particularly in recent years. Since Q4 2013, the consumer price index has cumulatively risen 32%, driving many consumers to use their credit cards as a financial backstop to help with increasing costs. A recent
“It’s no surprise that in this economic climate, one in which the cost of living is significantly higher relative to a decade ago, younger consumers are increasingly turning to credit products to bridge their financial needs,” said
Increasing Balances Reflect Higher Inflationary Pressures on Gen Z
22-24 Year Olds
2013 Average Balances Per Consumer | 2013 Balances Adjusted for Inflation | 2023 Average Balances Per Consumer | ||||
Credit Card | ||||||
Auto | ||||||
Unsecured Personal Loans | ||||||
Mortgage |
Source:
The financial pressures brought on by inflation likely are a driving factor in the performance of today’s Gen Z consumers as compared to the Millennial group a decade prior. In the 24 months following origination of a new account, Gen Z saw higher consumer-level delinquency rates for auto and credit card, and in particular for personal loans, with nearly 10% more Gen Z borrowers 60 or more days past due compared to Millennials 10 years earlier. At the same time, Gen Z consumers are not unique in experiencing greater financial challenges today. For all borrowers in 2023, consumer-level delinquency rates were higher than seen in 2013 across numerous credit products, including bankcards and auto loans. However, the rise seen among younger 22–24-year-old consumers, who are early in their credit journeys, warrants ongoing monitoring.
“The performance of the youngest Gen Z borrowers is down across a number of credit products as compared to Millennials of the same age 10 years earlier,” said
Gen Z consumers interested in learning about better credit practices can click here. To learn more about the
- The Gen Z generation is defined as those born between 1995 and 2012. Millennial generation is defined as those born between 1980 and 1994.
- The study featured an analysis of
TransUnion credit bureau data along with interviews of Gen Z consumers who were between the ages of 22 and 24 inDecember 2023 about their use of credit. As well, the study conducted a survey of nearly 1,200 Millennial consumers who were between the ages of 22 and 24 inDecember 2013 . That group was asked about their credit usage during that time 10 years prior.
About
http://www.transunion.com/business
Contact | |
dblumberg@transunion.com | |
Telephone | 312-972-6646 |
Source:
2024 GlobeNewswire, Inc., source