Many Gen Zers feel like they can’t catch a break with a once-in-a-century pandemic followed by a once-in-a-generation spike in inflation just as they came into adulthood. As a result, they’re relying on credit much more than millennials did at the same stage of life, according to a recent TransUnion report.

According to the credit bureau, 84 percent of 22- to 24-year-olds had a general-purpose credit card during the fourth quarter of 2023, compared with just 61 percent of 22- to 24-year-olds exactly a decade earlier. For comparison, private-label retail credit cards (which can typically only be used at a particular store or chain of stores) were more common a decade ago (44 percent of 22- to 24-year-olds had one in late 2013 versus 26 percent late last year), though that market has been under major pressure from Affirm, Afterpay, Klarna and other buy now, pay later (BNPL) lenders.

What has shaped Gen Zers’ attitudes toward credit?

“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.”

In some respects, it’s a good thing that Gen Zers are using credit at an earlier age than their predecessors. Building and maintaining a strong credit score is an important financial tool that can help people qualify for future loans and lines of credit, as well as non-credit obligations such as renting an apartment. Some employers and utility providers check credit reports and/or scores as well.

But unfortunately, Gen Zers aren’t just using more credit than millennials did at the same ages — they’re also racking up higher debt loads and falling behind on their payments more often, TransUnion says. Those behaviors, needless to say, are not advantageous for one’s credit score or financial well-being — not that these young adults want to be in debt or delinquency, of course.

Those developments are largely a consequence of the current financial climate which has been dominated by high prices and high interest rates for years. For example, TransUnion notes the Consumer Price Index has risen a cumulative 32 percent since late 2013, “driving many consumers to use their credit cards as a financial backstop to help with increasing costs.”

The organization adds, “The increase in card usage among Gen Z consumers is not necessarily unique to this demographic. Consumers as a whole have been using credit cards more to manage the significant and enduring growth in inflation over the past decade.”

The big fork in the road

Just over half (56 percent) of credit cardholders typically pay in full each month, according to a recent Bankrate report, while 44 percent tend to carry balances. In other words, for every person who is benefiting from rewards, buyer protections and other conveniences, there’s roughly one other who could easily become trapped in an expensive debt cycle. After all, the average credit card rate is a near-record 20.66 percent.

Two-thirds of credit card debtors are making the mistake of chasing rewards while in debt, that recent Bankrate survey found. The math never works out in those instances — paying 20 percent or more in interest just to earn a few percentage points in cash back or airline miles isn’t a good tradeoff. And I think the dangers are particularly pronounced among young adults.

Especially when you’re young and new to credit, your primary considerations should be developing good habits and avoiding debt. I understand times are tough for many, and it’s a difficult situation if you believe your best option is to finance gas, groceries, medical bills and other essentials with a credit card. If you’re in this position, it might be possible to get a credit card with a generous 0-percent balance transfer or introductory APR promotion — or at least a low ongoing rate (for instance, some credit unions offer credit cards with rates in the high single digits).

Working with a reputable nonprofit credit counseling agency such as Money Management International (MMI) can also be a good way to pay down debt and improve your finances. And while buy now, pay later can represent a slippery slope, that payment method could be a suitable alternative to credit card debt (especially if you’re offered a lengthy no- or low-interest plan).

When you have credit card debt, job number one is to avoid digging the hole any deeper, if at all possible. Job number two is to pay down your debt as quickly and cost-effectively as possible.

The bottom line

As the industry saying goes, credit cards are like power tools. They can be really useful or really dangerous, depending on how you use them. That’s not to shame anyone with credit card debt, since it’s often rooted in very practical causes such as emergency expenses or daily essentials that cost more than you’re bringing in each month.

But it’s so important to acknowledge that credit cards often charge very high interest rates and the best way to get them working for you is to pay in full every month. I worry that many Gen Zers are starting their credit journeys in a difficult position — falling behind on payments and racking up more debt than they can afford to pay back — that could be tough to dig out from as they grow older.

Have a question about credit cards? E-mail me at and I’d be happy to help.