Young Adults in Much Greater Credit Card Debt than Previous Generations

Young Adults in Much Greater Credit Card Debt than Previous Generations

A new study shows that younger Americans are adding more credit card debt than previous generations and paying it off at a slower rate.

The Ohio State study shows that a person born between 1980 and 1984 has an average credit card debt that is $5,689 higher than his or her parents' generation (those born 1950-1954), and $8,156 higher than the grandparents' generation (people born 1920-1924).

The younger generation is also paying off debt more slowly. The payoff rate is 24 percentage points lower than their parents' generation and approximately 77 percentage points less than that of their grandparents.

"Credit is more readily available now, and there have been changes in interest rates and less stigma attached to having credit card debt, which may all make younger people today more willing to go into debt," said Lucia Dunn, co-author of the study.

The study gives a reminder that consistently increasing the minimum payment lets borrowers pay off substantially more and eliminate their debt years earlier. Simply increasing the minimum payment by one percentage point increased the average payoff rate by 1.9 percentage points; increasing the payoff rate from 2 percent to 4 percent increases that average payoff rate by 3.8 percentage points.

The study followed a total of 32,542 respondents during the 13 years from 1997 to 2009.

Discover it® Apply Now

See Details

Discover it®

Special Offer: 0% Intro APR* on purchases and balance transfers for 14 months

Editor Rating:

Chase Slate® Apply Now

See Details

Chase Slate®

Special Offer: 0% intro APR for 15 months plus no balance transfer fees within the first 60 days

Editor Rating:

Chase Freedom® Apply Now

See Details

Chase Freedom®

Special Offer: 15 month 0% intro APR plus $100 bonus after your first $500 in purchases within the first 3 months of cardmembership

Editor Rating:

Citi® Platinum Select® / AAdvantage® World MasterCard® Apply Now

See Details

Citi® Platinum Select® / AAdvantage® World MasterCard®

Special Offer: No annual fee the first 12 months of cardmembership

Editor Rating:

Barclaycard® Ring MasterCard® Apply Now

See Details

Barclaycard® Ring MasterCard®

Special Offer: Low 8% (V) APR on purchases and balance transfers

Editor Rating: