Gen Z Consumers Are Using Credit More, and Differently, than Their Millennial Counterparts at the Beginning of their Credit Journeys

Gen Z consumers are tapping into credit at higher levels than their Millennial counterparts did in the early stages of adulthood (ages 22-24). TransUnion (NYSE: TRU) released these findings today at the company’s 2024 Financial Services Summit, attended by nearly 300 global financial services executives.

The new TransUnion study, Solving for Z, explored credit usage by today’s Gen Z consumers and compared it to similarly aged Millennials one decade ago1. The study found that both Gen Z and Millennial borrowers faced early challenges in their credit journeys. 75% of surveyed Gen Z consumers said they had their finances negatively impacted by the pandemic-induced recession, while 60% of Millennials said the Global Financial Crisis had negatively impacted them. However, today’s Gen Z consumers have also faced an additional challenge – a rapid rise in inflation.

“Gen Z consumers have seen their finances significantly impacted by the pandemic and its aftermath, even more so than the challenges faced by Millennials as a result of the Global Financial Crisis,” said Michele Raneri, vice president and head of U.S. research and consulting at TransUnion. “This likely has played a key role in the shifting priorities of Gen Z consumers, both in the types of credit they are seeking, and the way they are using that credit once they gain access to it.”

The study2, which included analysis of recent credit data for Gen Z consumers as well as credit data from 10 years ago for Millennials, found that Gen Z borrowers are opening more credit lines and have both higher debt levels and delinquency rates compared to Millennials at the same age. Yet, Gen Z borrowers also are performing in a similar manner to younger generations of the past in comparison to older generations (i.e. younger generations typically have higher delinquency rates as a group than older ones). The study found that 84% of credit-active Gen Z consumers had at least one credit card (bankcard) as of Q4 2023. This is significantly higher than the 61% of credit-active Millennials who had at least one card 10 years prior. This comes as nearly 36% of Gen Z consumers ranked credit cards as the most useful credit product, up from 29% of Millennials a decade ago.

Gen Z Consumers Are Using Bankcards and Auto Loans More than Their Millennial Counterparts Did At the Same Age 10 Years PriorProduct Penetration Among Credit-Active Consumers

	Millennial 22-24 Year Olds in Q4 2013	Gen Z 22-24 Year Olds in Q4 2023
Credit Card (General-Purpose Bankcard)	61%	84%
Credit Card(Private Label)	44%	26%
Student Loan	49%	34%
Auto	25%	30%
Personal Loan	5%	5%

Source: TransUnion Consumer Credit Database

Increased card usage comes amidst elevated inflation

The increase in card usage among Gen Z consumers is not necessarily unique to this demographic, as consumers as a whole have been using credit cards more to manage the significant and enduring growth in inflation over the past decade, particularly in recent years. Since Q4 2013, the consumer price index has cumulatively risen 32%, driving many consumers to use their credit cards as a financial backstop to help with increasing costs. A recent TransUnion report found that due to this increased usage, the total credit card balance held by U.S. consumers tipped past $1 trillion for the first time in 2023. In addition to rising credit card balances, higher prices have contributed to higher balances among Gen Z consumers across other credit products, including auto loans, up 14% in 2023 as compared to the inflation-adjusted 2013 average balances.

“It’s no surprise that in this economic climate, one in which the cost of living is significantly higher relative to a decade ago, younger consumers are increasingly turning to credit products to bridge their financial needs,” said Jason Laky, executive vice president and head of financial services at TransUnion. “This is a demographic that is younger and newer to the workforce and accordingly, is likely commanding a lower salary at an earlier point in their career. As long as inflation remains elevated and the cost of goods remains so as well, balances across products such as credit cards, personal loans, and auto are likely to continue to grow.”

Increasing Balances Reflect Higher Inflationary Pressures on Gen Z22-24 Year Olds

	2013 Average Balances Per Consumer	2013 Balances Adjusted for Inflation	2023 Average Balances Per Consumer
Credit Card	$1,708	$2,248	$2,834
Auto	$14,468	$19,043	$21,767
Unsecured Personal Loans	$3,785	$4,981	$5,273
Mortgage	$113,301	$149,130	$215,150

Source: TransUnion Consumer Credit Database, Bureau of Labor Statistics (BLS)

The financial pressures brought on by inflation likely are a driving factor in the performance of today’s Gen Z consumers as compared to the Millennial group a decade prior. In the 24 months following origination of a new account, Gen Z saw higher consumer-level delinquency rates for auto and credit card, and in particular for personal loans, with nearly 10% more Gen Z borrowers 60 or more days past due compared to Millennials 10 years earlier. At the same time, Gen Z consumers are not unique in experiencing greater financial challenges today. For all borrowers in 2023, consumer-level delinquency rates were higher than seen in 2013 across numerous credit products, including bankcards and auto loans. However, the rise seen among younger 22–24-year-old consumers, who are early in their credit journeys, warrants ongoing monitoring.

“The performance of the youngest Gen Z borrowers is down across a number of credit products as compared to Millennials of the same age 10 years earlier,” said Charlie Wise, senior vice president and head of global research and consulting at TransUnion. “While inflation and interest rates remain elevated, Gen Z consumers need to be particularly cautious in how they use and manage their available credit, given the relative youth of their credit profiles and lack of a robust historical track record. Establishing a foundation of strong credit performance will be important as this emerging segment looks to expand their credit wallets to meet their future needs.”

Gen Z consumers interested in learning about better credit practices can click here. To learn more about the TransUnion study Solving for Z, click here.

The Gen Z generation is defined as those born between 1995 and 2012. Millennial generation is defined as those born between 1980 and 1994.
The study featured an analysis of TransUnion credit bureau data along with interviews of Gen Z consumers who were between the ages of 22 and 24 in December 2023 about their use of credit. As well, the study conducted a survey of nearly 1,200 Millennial consumers who were between the ages of 22 and 24 in December 2013. That group was asked about their credit usage during that time 10 years prior.

About TransUnion (NYSE: TRU)

TransUnion is a global information and insights company with over 13,000 associates operating in more than 30 countries. We make trust possible by ensuring each person is reliably represented in the marketplace. We do this with a Tru™ picture of each person: an actionable view of consumers, stewarded with care. Through our acquisitions and technology investments we have developed innovative solutions that extend beyond our strong foundation in core credit into areas such as marketing, fraud, risk and advanced analytics. As a result, consumers and businesses can transact with confidence and achieve great things. We call this Information for Good® — and it leads to economic opportunity, great experiences and personal empowerment for millions of people around the world.

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