Get All Access for $5/mo

'Is This a Sign of Trouble Ahead?': Gen Z Is Missing Credit Card Payments, Running Up Debt Credit card debt has increased while spending has stayed strong.

By Gabrielle Bienasz

Opinions expressed by Entrepreneur contributors are their own.

Matt Cardy I Getty Images
Credit, debit cards, and coins.

Younger adults in the U.S. saw the biggest yearly increase of 90-day delinquency in credit card payments compared to other age groups in the third quarter, Insider reported.

The group of people aged 18 to 29-year-olds saw their 90-day delinquency rate go up to over 6%, the largest increase of all age groups from the third quarter of 2021 to the third quarter of 2022.

The overall rate for the number of payments on credit cards that were over 90 days overdue was 3.7% in Q3. In Q3 2021, it was 3.2%, according to data from The Federal Reserve Bank of New York.

The Fed's work showed that everyone is starting to accumulate credit card debt increasing inflation — in contrast to historic, pandemic-era lows.

Related: The Fed Raised Interest Rates Again. Here's What That Means for Your Wallet.

"The first three quarters of 2022 have seen a rapid increase in credit card balances after they contracted sharply during the early part of the COVID pandemic," the Fed wrote in a related blog post earlier this month.

For delinquency overall, the researchers posited: "Is this simply a reversion to earlier levels, with forbearances ending and stimulus savings drying up or is this a sign of trouble ahead?"

As Insider noted, it's not a great time for young people to run up credit card debt. Bloomberg economists in October said there is a 100% chance of a recession in the US within the next 12 months.

These types of economic events typically hurt younger workers more. It did when the pandemic hit, too, resulting in a higher unemployment rate for people aged 16 to 24. This has financial impacts that can last for years, according to the Economic Policy Institute.

Millennials capital accumulation is damaged for life due to the 2008 recession and the 2020 pandemic economic crisis, The Washington Post previously reported.

Credit card debt has increased amid squeezed wages, increasing inflation, and, at the same time, not a real slowdown in consumer spending, the Fed noted in the blog.

"With prices more than 8 percent higher than they were a year ago, it is perhaps unsurprising that balances are increasing," the researchers wrote.

Credit card debt was up by $38 billion from the second quarter to the third in 2022. That was a 15% increase, "the largest in more than twenty years," the Fed noted.

Because of aid programs during the pandemic and shut down businesses, Americans saved at historic rates, driving down credit card debt. It appears that trend is over.

The research, "sheds light on the more rapidly increasing debt burdens and delinquency of the younger and less wealthy card holders, and may suggest disparate impacts of inflation," the Fed wrote.

Gabrielle Bienasz is a staff writer at Entrepreneur. She previously worked at Insider and Inc. Magazine. 

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Marketing

6 Steps to a Simple and Effective Content Strategy

Strategy can be an intimidating word, but it doesn't have to be. Follow these simple guidelines to make sure your next piece of content — and every one thereafter — rings true to your brand.

Growing a Business

How to Build, Grow and Make Money With Ecommerce

To grow your online business, you need to develop a strategy and invest your time wisely. These actionable tips can attract customers and increase online revenue.

Side Hustle

'Hustling Every Day': These Friends Started a Side Hustle With $2,500 Each — It 'Snowballed' to Over $500,000 and Became a Multimillion-Dollar Brand

Paris Emily Nicholson and Saskia Teje Jenkins had a 2020 brainstorm session that led to a lucrative business.

Business Solutions

Why Aren't More Business Owners Using This $18 App?

Turn complex data into convincing visuals with Microsoft Visio Pro.

Employee Experience & Recruiting

There's a Growing Demand For This New Type of Professional — Here's Why Your Startup Needs Them, Too.

As startups evolve, a new breed of talent — the "boulder climber" — is emerging: adaptable professionals who balance strategic vision with hands-on execution. Learn why these versatile hires are redefining success in lean, agile teams.

Business News

'I'm Shocked': Costco Customers Are Freaking Out About a Change to a Beloved Bakery Item

Costco customers are feeling burnt by a not-so-sweet switcheroo in the bakery department.