Gen Z debt outpaces Millennial peers

Gen Z individuals hold 12% more debt than they did twelve months ago, according to TransUnion data cited by Ted Rossman of Money Management International. The increase persists even after adjusting for inflation, marking a sharper rise compared to the debt levels Millennials carried at the same age.

Rossman reported that demand for credit counseling services from Gen Z clients grew by 35% over the past year. The surge in borrowing is driven by the combination of student loans, elevated rental costs, and the widespread use of buy now, pay later plans. These financial obligations leave many young adults managing their cash flow on a paycheck-to-paycheck basis with minimal savings.

“That’s really showcasing a lot of these early career pressures,” Rossman said. “You have student loans, you have high housing costs. 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.”

The credit counselor advised young adults to track their budgets and monitor spending on installment plans. While these services are popular with people in their 20s, Rossman noted they function as debt rather than free money. “It can work in your favor. Sometimes you can get a good deal, but just be mindful that it’s not a free lunch. 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,” he added.

Rossman also warned that interest rates on credit card debt often reach the 20% range, increasing the cost of carrying balances. He stated that individuals who feel overwhelmed by their obligations can request assistance from the agency. The data and advice were presented by Money Management International in response to current market conditions.