Fact Checked

Gen Z drives significant growth in credit market

College student sitting in a cafe, looking at her laptop and holding a credit cardImage: College student sitting in a cafe, looking at her laptop and holding a credit card
Editorial Note: Intuit Credit Karma receives compensation from third-party advertisers, but that doesn’t affect our editors’ opinions. Our third-party advertisers don’t review, approve or endorse our editorial content. Information about financial products not offered on Credit Karma is collected independently. Our content is accurate to the best of our knowledge when posted.

More members of Gen Z — which includes 18- to 24-year-olds — have jumped into the consumer credit market, according to the latest TransUnion Industry Insights report.

According to the report, during the second quarter of 2019, about 14 million Gen Z consumers had credit card debt, an auto loan, a personal loan or a mortgage — up from 11 million in the second quarter of 2018. This nearly 44% rise was driven by demand across all types of loans.

Want to know more?

Why is Gen Z taking on more debt?

Members of Gen Z are people born in 1995 and after. This means the oldest members of the generation are turning 24 this year — an age when many young adults are entering the workforce and may need credit. They may also be looking to make large purchases like a new car or home.

How could this impact the economy?

More people entering the workforce is generally a good thing for the economy, because it means they’ll have more money to buy goods and services. According to the TransUnion report, another 13 million Gen Z consumers are expected to become credit eligible over the next three years.

What can you do to keep your debt in check?

If you’re a member of Gen Z entering the credit market, you may be wondering how to keep your debt under control. We have some tips.

  • It all begins with a budget. Think about how much money you have coming in and going out every month. To keep it simple, you could start with something like the 50-30-20 rule, where you spend 50% of your monthly income on bills and other necessities, 30% on fun, and the other 20% on savings and paying down debt.
  • Build your credit wisely. If you’re newer to the credit market, your borrowing options may feel limited. But there are some ways you can work to build credit, like having a parent co-sign a loan, or applying for a secured credit card.
  • Have a solid debt-repayment plan. This might mean paying down your highest-balance debt first, or it could mean paying off your highest-interest debt first. Either way, having a plan to tackle your debt and sticking with it can help you reach your financial goals.

About the author: Paris Ward is a content strategist at Credit Karma, providing readers with the latest news that will aid their financial progress. She has more than a decade of experience as a writer and editor and holds a bachelor’s… Read more.