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It appears a growing share of Gen Z is in their credit card debt era.
The share of Gen Zers, defined as adults ages 18 to 29, carrying a credit card balance month to month grew by more than 19% between the third quarter of 2023 and the second quarter of 2026, a recently released Deloitte and ConsumerSignals survey found. The survey polled 1,000 U.S. adults each month between July 2022 and June 2026. Each monthly survey has a margin of error of plus or minus 3 percentage points.
The shares of every other adult generation carrying credit card balances fell over the same time period, with the share of baby boomers with balances shrinking the fastest, by nearly 26%.
Credit cards represent “one of the most expensive ways to borrow,” says Eileen Olson, certified financial planner and founder of Emerald Wealth. Credit card interest rates averaged around 21% in August, as of the latest Federal Reserve data, which means “balances grow fast, and minimum payments can stretch a small balance across years,” she says.
Gen Z borrowers and others who carry credit card balances can pay substantially more than they originally charged. Plus, the compounding nature of the debt can also make it difficult to accomplish other financial goals like saving for emergencies and investing for the future.
‘Living in reaction instead of with intention’
Olson, who uses a behavioral finance approach with her clients, says the world we live in that’s “designed to sell us things” could be contributing to young people’s worsening credit card debt problem. Tapping your card often doesn’t feel like spending money, so it’s easy to rack up expenses and worry about the cost later, she says.
Olson has a Gen Z daughter and says she and her peers are “generous, creative and full of plans” — positive qualities that can nevertheless lead to overspending, she says. Additionally, many Gen Zers are just starting their careers and are well short of their peak earning years. That can make it difficult to meet various financial obligations, especially in the face of rising essential costs.
Americans are dealing with elevated costs for essentials like housing and groceries, and many young folks are also making costly student loan payments every month. Add to that discretionary recurring expenses like streaming subscriptions and some impulsive spending, and individuals can easily wind up with little room between their income and their expenses, Olson says.
“Without a plan, we end up living in reaction instead of with intention,” she says. When that’s the case, “every surprise [expense] lands on a card, and you’re stuck in survival mode.”
That’s why financial experts recommend stashing away as much emergency savings as you can to help keep those surprises from derailing your budget. But if you’re having trouble just making ends meet, it could be time to reassess your priorities and check in with your spending to make sure it aligns with the things you most value.
“If you’re saving for a house but eating out every day on autopilot, those two goals are pulling against each other,” she says.
Pay off debt or save for the future?
Once you’ve established a rainy day fund, it’s time to figure out how to balance tackling your debt while saving for the future. Generally, the math supports focusing on high-interest debt first. That’s because any money you put toward an outstanding balance is essentially the equivalent of earning a return on an investment, Olson says.
From 1926 through 2025, the broad stock market posted an annualized return of about 10%, according to Charles Schwab Asset Management. That long-run market return is still well below the roughly 20%-plus APR common on revolving credit card balances.
When you’re carrying a credit card balance, you’re effectively losing money each month as the interest adds to the total amount you have to pay back. The longer you take to pay it back, the more you’ll owe overall.
For example, if you have a $5,000 balance on a credit card with a 21% interest rate, you’ll wind up paying back $6,166 if you take two years to pay it off, paying $256 a month, according to Bankrate’s credit card payoff calculator. Upping that monthly payment to $350 would shave seven months off your payoff timeline and save you $362 in interest charges.
In other words, while investing for the future can help build wealth, you’re better off stopping the proverbial bleeding.
“Paying off a 20% card is a guaranteed 20% return,” Olson says. “Keep the savings habit alive, then redirect those card payments to retirement once the debt is gone.”
Olson brings up one exception to this rule: She encourages individuals — even those in debt — to contribute enough to workplace retirement plans to earn their full employer match, if their company offers one. “That’s free money,” she says — a 100% return on each dollar you put into the account. From there, she says, aim to put every extra dollar toward your high-interest debt.
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