Gen Z debt is up 12% in a year, outpacing Millennials at same age

Young adults are borrowing more than the generation before them did at the same age.

TransUnion data indicates that Gen Z debt loads are currently 12% higher than they were a year ago. This figure holds true even after adjusting for inflation. The data reveals that Gen Z carries more debt than Millennials did when they were the same age. Ted Rossman, a credit counseling expert at Money Management International, cited these figures in an interview. His agency has reported a 35% rise in demand from Gen Z clients over the past twelve months.

Rossman attributes the increase to specific economic pressures. He points to student loans and high rents as major factors. Buy now, pay later plans also contribute to the total amount owed. Many young adults are living paycheck to paycheck with little savings. Rossman described these as early career pressures. He noted that household formation years are very expensive. This makes the debt burden for Gen Z heavier than the Millennial benchmark.

The credit counseling expert advised clients to start with the basics. This includes knowing their budget and monitoring buy now, pay later spending. Rossman warned that these plans are popular among people in their 20s but still constitute debt. He said they can work in a person's favor if used for a good deal. However, he cautioned that it is not a free lunch. Even with interest free periods, payments are due now and in subsequent weeks. Borrowers must be careful not to overspend.

Interest rates on credit card debt often range around 20%. Rossman said people who feel they are in too deep can ask for help. The data shows a clear shift in how young adults manage their finances compared to previous decades.