Money Management International: Gen Z Debt Surpasses Millennial Levels

Younger American adults now carry heavier debt loads than the generation that preceded them. According to data from TransUnion, Gen Z borrowers hold more debt at the same age than Millennials did, even after adjusting for inflation.

Ted Rossman, a credit counseling expert at Money Management International, noted that the agency has observed a 35% rise in demand from Gen Z clients over the past year. During the same period, the debt levels of these clients increased by approximately 12%. The primary drivers cited include student loans, elevated rental costs, and the widespread use of buy now, pay later services.

Rossman explained that these financial pressures hit during the early career years. He stated, 'Those household formation years are very expensive, so GenZer’s actually have more debt than Millennials did at the same age, even adjusted for inflation according to TransUnion.' Many young adults are living paycheck to paycheck with minimal savings as a result.

The expert advised younger borrowers to focus on basic financial hygiene, specifically tracking budgets and monitoring buy now, pay later spending. He warned that while these plans offer interest-free periods, they still constitute debt. 'Even if it’s that 6 weeks of interest free payments you’ve got to make a payment now and another one in two weeks and another one in two weeks, just need to be careful that you’re not overspending,' Rossman said.

Rossman also highlighted the risk of high interest rates on credit card debt, which often reaches the 20% range. He cautioned that interest accrued on promotional deals can quickly offset any savings from interest-free windows. Individuals feeling overwhelmed by their obligations can seek assistance from credit counseling agencies.

The data reflects a shift in consumer borrowing habits among those in their 20s. The combination of essential costs and flexible spending tools has created a distinct financial profile for this generation compared to previous decades.