Gen Z has the fastest-growing credit card debt of any generation 🤯; Visa & Mastercard eye credit card fees increase 👀💳
FinTech is Eating the World, 4 September
Hey Everyone,
Happy Monday! I hope you managed to recharge over the weekend because we’re starting the new week with some heavy stuff 💪🏼 Today we’re looking at Gen Z which has the fastest-growing credit card debt of any generation (latest data + what this means & what’s next), and Visa & Mastercard that eye credit card fees increase (what it’s all about + deeper dives into two financial giants & the USP of Open Banking). Let’s jump straight into the hot stuff 🌶
Gen Z has the fastest-growing credit card debt of any generation 🤯
The (sad) news 😔 Gen Z's credit card debt is outpacing that of other generations, according to Credit Karma data.
Let’s take a quick look.
More on this 👉 In Q2, Gen Z's credit card balances averaged $3,328, up by 4.23% from $3,193 in Q1. Despite this growth, Gen Z still holds the lowest credit card debt among all generations. Phew.
Looking at the big picture, what’s worrying is that a survey by JD Power revealed that over half (51%) of US consumers can't fully pay off their monthly credit card balances, leading to accrued interest. This could backfire…
This marks the highest level in recent years, with figures ranging between 40% and 50% from 2018 to 2022.
The surge in credit card interest rates has contributed to the escalation of consumer credit card debt. In July, US consumer credit card debt exceeded $1 trillion for the first time, based on Federal Reserve Economic Data. Ouch.
✈️ THE TAKEAWAY
Why this matters? 🤔 Debt by itself isn’t bad - what matters is whether you can (& how easily you can) repay it. The problem here is that delinquencies on auto loans, credit cards, and consumer loans just hit their highest levels since 2012:
If that wouldn’t be enough, certain economic factors could lead to higher delinquencies, especially among Gen Z. The persistence of high inflation, which stood at 4.7% YoY according to the Labor Department's core consumer price index, is straining budgets. Moreover, student loan payments are set to restart in October, adding to financial pressures. The average monthly payment is expected to be around $400 per borrower. Finally, the decline of pandemic-related excess savings erodes a crucial financial safety net for consumers. With that in mind, the rise in Gen Z's credit card debt, combined with broader challenges in paying off balances, high inflation, student loan payments resuming, and decreased savings, could collectively (& negatively) impact the financial well-being of individuals in this generation that’s been "fighting" inflation with debt they can't afford. It might be too early to ring alarm bells, but this doesn’t look great…