The Credit Card Problem: A Ticking Time Bomb for Gen Z and Millennials, and it’s Only a Matter of Time Before it Explodes

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In a startling turn of events, nearly 1 out of 7 Gen Z consumers saw their credit maxed out in Q1 2024, according to the New York Fed. This is the highest percentage since the 2020 pandemic lockdown. Meanwhile, 12% of Millennials have utilized over 90% of their credit limit, an even higher share than the pandemic. Gen Z and Millennials’ median credit limits are currently $4,500 and $16,300, respectively. Furthermore, ~10% of Gen X individuals have maxed out their $21,800 median credit limit.

The situation is dire, with Americans currently holding $1.12 trillion in credit card debt, near the all-time high. This is a clear indication that US consumers are still “fighting” inflation with debt. The delinquency rates are also a cause for concern, with almost 3.5% of card balances being at least 30 days past due. Credit card serious delinquency rates (90+ days) are rising at the fastest pace since the Great Financial Crisis.

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The situation is further exacerbated by the fact that 82% of recent homebuyers had regrets about their purchase, with more than 40% of this group saying they’ve struggled to make on-time mortgage payments or have taken on new debt to maintain their current lifestyle.

The demand for non-essential goods has also collapsed, indicating a deflationary trend in the clothing sector. This is a clear sign of a debt tsunami that is threatening to engulf the younger generations.

The New York Federal Reserve’s report also shows that credit card delinquencies are on the rise, with nearly a fifth of borrowers being “maxed-out.” This is a clear indication of the financial distress that many households are facing.

In the face of these challenges, US consumers are starting to rein in their spending. Retail sales were unchanged from March to April, missing the 0.4% increase that economists had projected. By sector, the biggest monthly increase in spending was at gas stations, while online retail sales saw the biggest decline.

Retail sales are declining. Either everyone is broke or they are not spending money!




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Credit card delinquencies surge, almost 1 in 5 users maxed-out

The backbone of America’s economy was just dealt a serious blow

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