Generation Credit Card | Business Insider

Credit cards have become a double-edged sword for many Gen Zers, offering both a gateway to opportunities and a pathway to financial strain. For some, post-pandemic revenge spending or the allure of points and rewards has led to mounting credit card debt. Others, however, have turned to plastic as a lifeline to cover basic living expenses amidst rising costs and modest wages. This generation’s comfort with credit cards, while enabling temporary solutions, often paves the way for long-term challenges.

Take Danikowski, for example. Enticed by an American Express gold travel card, he built up rewards that fueled a travel-rich lifestyle but left him with spiraling debt. The habit of funding experiences on credit became hard to break, even as the financial toll mounted. Similarly, Nico, a young advertising strategist, relied on his credit card to manage rent, bills, and social outings after relocating to Chicago on a modest salary. His $20,000 debt now comes with a $400 monthly minimum payment, much of which goes straight to interest.

The story is similar for others like Emmaline, who relied on credit during a career pivot, and William, who’s tethered to debt after covering necessities and unexpected expenses. While Emmaline managed to pay off her $6,000 debt with strict budgeting and family support, William’s $20,000 debt feels like a barrier to his dreams, tethering him to jobs that ensure stable income but limit his aspirations. The invisible weight of credit card debt often brings a sense of shame and helplessness, creating a cycle of financial struggle.

This trend isn’t confined to isolated cases. In 2023, total U.S. credit card balances surpassed $1 trillion, with young Americans facing the burden. Gen Z’s average credit score has dropped, and the percentage of those with subprime credit has risen significantly. High interest rates and lenient credit limits make climbing out of debt an uphill battle, with many struggling to keep up with minimum payments while interest accumulates.

Experts like Alev recommend proactive steps to combat this issue: avoid high-interest debt, stop adding to existing balances, and create a clear repayment plan. Transferring debt to lower-interest options or consolidating it can ease the burden, but the key is facing the problem head-on. While some, like Danikowski, continue to indulge in experiences despite financial strain, others are learning the hard lessons of credit’s long-term impact………[read more]

Rising Dough

If credit cards provide freedom and flexibility, why do they leave young consumers feeling trapped? How do marketing strategies from credit card companies influence spending habits and the perceived value of rewards versus the reality of debt?