Timothy Danikowski was ready to start his adult life. After four years in a small college town and a fifth year back at home thanks to the pandemic, he finally moved to Seattle in 2021. Soon after, Danikowski landed a respectable accounting job, moved into his own apartment, and signed up for his first credit card, which he intended to use only for emergencies.
At first Danikowski kept on top of his balance well enough, but soon his compulsive shopping addiction and desire to see the world broke his discipline. “I built up points to travel,” he told me. “But when I travel, I want to go shopping, and that’s where the spending gets out of control.”
In three years, Danikowski has racked up about $15,000 in debt across three cards, one of which has an interest rate of 28%. He makes his minimum payments each month — a task that has become much harder since he lost his job this year — and tries to resist the urge to keep using the cards, but his balance doesn’t budge.
“When it comes to everyday things, I choose comfort over everything else,” he said.
Danikowski and many other Gen Zers are rapidly building up credit-card debt. A TransUnion study found that, adjusting for inflation, the average credit-card balance for someone who was 22 to 24 at the end of last year was $2,834, a 26% increase from the average figure for millennials who were the same age a decade ago. The study also suggested that Gen Zers were much more comfortable with credit cards than prior generations were: They were opening more cards, were more likely to fall behind on payments, and were using the cards for more types of purchases. Alev told me Credit Karma data shows Gen Zers are acquiring debt at a faster rate than any other age group. The combination of an increasingly turbulent economy and Gen Zers’ desire to make up for lost time via pandemic “revenge spending” has left many members of the generation overly reliant on credit.
“Gen Z really prioritizes fun over finances when it comes to things like eating out, shopping, and travel,” says Courtney Alev, a consumer advocate at Credit Karma. “That combined with the fact that they have just had fewer earning years explains why their credit-card debt is growing at a faster rate.”
Read full story at Business Insider.
