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Insight of the Day: Gen Z Consumers Use Credit More, and Differently, than Millennials at the Beginning of their Credit Journeys

The data from TransUnion highlights the differences in credit usage between Gen Z and Millennials at the beginning of their credit journeys. Here are some key points from the study:

  • Gen Z vs. Millennials: Gen Z consumers are using credit at higher levels compared to Millennials when they were in the same age group (22-24).

  • Impact of Economic Events: Both Gen Z and Millennials faced challenges in their credit journeys due to economic events. Gen Z consumers reported significant financial impacts from the pandemic-induced recession, while Millennials were affected by the Global Financial Crisis.

  • Rise in Inflation: Gen Z consumers have faced an additional challenge of rapid inflation, influencing their financial priorities and credit behavior.

  • Credit Usage Trends: Gen Z borrowers are opening more credit lines, carrying higher debt levels, and experiencing higher delinquency rates compared to Millennials at a similar age.

  • Credit Card Usage: 84% of credit-active Gen Z consumers had at least one credit card, significantly higher than the 61% of credit-active Millennials a decade ago. Gen Z consumers are increasingly viewing credit cards as the most useful credit product.

  • Increased Card Usage Amidst Inflation: The surge in credit card usage among Gen Z is not unique to this demographic, as consumers overall have been relying more on credit cards to manage the impact of rising inflation over the past decade.

  • Total Credit Card Balance: The total credit card balance held by U.S. consumers surpassed $1 trillion, reflecting the trend of increased credit card usage to cope with escalating costs due to inflation.

This data illustrates how Gen Z consumers are navigating their credit journeys differently from Millennials, adapting to economic challenges and shifting financial landscapes.

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