The Wall Street Journal’s Post

Government has set precedents with stimmy checks, student loan forgiveness, 18-months debt hiatus (without impacting FICO scores), and young people will expect some relief from the rest of their accumulated debt. Perhaps student loans and medical debt will be folded into existing bankruptcy laws to make discharge far easier. There are many monetary and fiscal tricks available to help the public continue to spend in order to continue to increase GDP in order to get incumbents reelected...~r "Young Americans are starting out with more credit-card debt than generations before them. That financial burden can have long-lasting effects. The rising debt load largely reflects a surge in prices for food and shelter at the start of their careers, coupled with a larger percentage of Gen Z who graduated with student loans. The average credit-card balance for 22- to 24-year-olds was $2,834 in the last quarter of 2023, compared with an average inflation-adjusted balance of $2,248 in the same period in 2013, according to new data from credit-reporting agency TransUnion. Younger people with higher debt are more delinquent on credit-card payments and need to rely on family for help if they lose their job, say economists and financial advisers. They also often delay life milestones, including homeownership and marriage, say the economists. “This is a generation that is feeling financial stress in a more acute way than millennials did a decade ago,” said Charlie Wise, head of global research at TransUnion. Lindsay Quackenbush was recently working for a publishing company that paid her $60,000 a year. The money was just enough for the 26-year-old to cover her portion of the rent for the New York City basement apartment where she and her boyfriend live. Then she was laid off. She is carrying a balance of about $1,700 across three credit cards and is for the first time not able to pay off her credit cards in full. She is making the minimum payment for now while she hunts for a new job. As for thinking about milestones such as marriage and children, she and her friends have discussed putting anything like that off until they are in a more financially stable position. “Who knows when that will be?” she said."

Title: The Complexities of Credit Card Debt: Understanding Its Impact and Managing Wisely Introduction: In today's financial landscape, many individuals turn to debt, particularly credit card borrowing, to address urgent financial needs, often necessities. While credit cards are designed to provide financial security for small, immediate expenses, they may not be the most suitable option for larger financial requirements, which can be better served by other retail loan products. Despite this, the proliferation of credit cards has reached unprecedented levels, with over 6.8 billion cards globally valued at over $1 trillion as of 2020, according to FDIC and TransUnion data. Statistics: By the end of 2023, the United States alone had amassed over $1.13 trillion in credit card debt, while the United Kingdom followed with £66.4 billion. Among the top twenty economies, the average credit card balance stood at $2,080, with the United States leading at an average of $5,733 and Canada boasting the highest penetration rate at 41%. Impact of Credit Card Use: The escalating cost of living and soaring inflation rates have propelled individuals, households, and businesses toward the convenience of credit cards. Their accessibility, flexibility, and relaxed eligibility criteria make them an appealing solution for meeting immediate financial obligations. However, over-reliance on credit cards for all financial needs can lead to dire consequences if not managed prudently. Recommendations: While credit cards offer timely access to address basic financial needs, dependency on them for all expenses can result in financial, social, and emotional turmoil if not carefully managed. To avoid such pitfalls, individuals should practice responsible credit card usage by: 1. Setting and adhering to a budget. 2. Paying off balances in full each month to avoid accruing interest. 3. Avoiding unnecessary purchases and impulse buying. 4. Monitoring credit card statements regularly for fraudulent activity. 5. Seeking financial advice or counseling if struggling with debt. Conclusion: Credit cards can be valuable financial tools when used wisely, providing convenience and flexibility. However, their misuse can lead to overwhelming debt and financial distress. By understanding the complexities of credit card debt and adopting responsible financial practices, individuals can navigate the challenges of modern-day finances more effectively and secure their financial well-being in the long run..

🚨 Attention Young Professionals! Financial Burdens Mounting for Gen Z 🚨 Recent data from TransUnion sheds light on a concerning trend: young Americans are launching into their careers with heavier credit-card debt burdens than their predecessors. The average credit-card balance for 22- to 24-year-olds surged to $2,834 in the last quarter of 2023, up from an inflation-adjusted $2,248 in 2013. What’s driving this spike? Rising Costs, Stagnant Wages: As young professionals enter the workforce, they're met with soaring prices for essentials like food and shelter. Coupled with the prevalence of student loans among Gen Z, this financial squeeze is palpable. Impact on Milestones: Economists and financial advisors warn that higher debt levels lead to more missed credit-card payments and increased reliance on family support during job loss. Moreover, these financial strains often delay significant life milestones such as homeownership and marriage. Personal Stories Reflect Broader Trends: Lindsay Quackenbush, a 26-year-old New Yorker, found herself grappling with credit-card debt after a job loss. Similarly, Adriana Cubillo, a 26-year-old in Salt Lake City, faces the challenge of rising rent on a modest salary. Credit Card Culture: The allure of credit cards has grown, especially among Gen Z, with easier access to lines of credit. Many young adults, like Emma Goodness, are authorized users on their parents' cards, kickstarting their credit journey early. Navigating Financial Responsibility: While credit can offer financial flexibility, it requires careful management. Emma Goodness learned this firsthand, acknowledging the importance of staying on top of payments to maintain a healthy credit score. Moving Forward: As the financial landscape evolves, it’s crucial for young professionals to prioritize financial literacy and responsible credit usage. By understanding the nuances of debt management and budgeting, they can pave the way for a more secure financial future. Join the conversation! How has credit-card debt impacted your financial journey as a young professional? Share your experiences and insights below. 💼💡 #FinancialLiteracy #GenZFinance #CreditSmart

Gen Z Sinks Deeper Into Debt Inflation drove many to credit cards to cover costs, leaving them with bigger balances By Oyin AdedoyinFollow May 7, 2024 5:30 am ET Young Americans are starting out with more credit-card debt than generations before them. That financial burden can have long-lasting effects. The rising debt load largely reflects a surge in prices for food and shelter at the start of their careers, coupled with a larger percentage of Gen Z who graduated with student loans. The average credit-card balance for 22- to 24-year-olds was $2,834 in the last quarter of 2023, compared with an average inflation-adjusted balance of $2,248 in the same period in 2013, according to new data from credit-reporting agency TransUnion.

Did consumers protect the economy by credit card use to inadvertently create a rosy economic “soft landing“ for the economy, post-pandemic? I guess the jury is still out. Credit card balances rose by $50 billion to hit a record $1.13 trillion. Inflation and higher interest rates are contributing to rising credit card debt, resulting in more Americans struggling to pay down their credit card balances, according to Bankrate's senior industry analyst Ted Rossman. An annualized 8.5% of credit card balances and 7.7% of auto loan balances moved into delinquency status in the final months of 2023, according to the New York Fed's quarterly report on household debt and credit. Credit card delinquencies surged more than 50% in 2023, the New York Fed reported. And then there is student debt. The total student debt balance — including federal and private loans — was nearly $1.74 trillion, 50% higher than even national credit card debt. Total federal student loan debt has roughly tripled since 2007. 3 in 10 adults took on debt to pay for college. And it’s not just consumers in a pickle. Corporate debt defaults soared 80% in 2023 and could be high again this year, S&P says. The number of companies that failed to make required payments on their debt totaled 153 for 2023, up from 85 the year before, an increase of 80%, according to S&P Global Ratings. There is a lot of purchasing power in consumer and corporate debt. Right up until delinquencies and defaults begin to change the game. Let’s see how we might navigate that soft landing in the next chapter. Debt doesn’t make great rose garden fertilizer, long-term, in a high-inflation high interest-rate environment. 51% of Americans have overdrafted their account to pay a bill, with 26% saying they’ve done it more than once. https://lnkd.in/eDHWUWzh Add to that slippery “plate” a garnish of 30 year highs in the cost of food relative to income. Food manufacturers and restaurants have no ready remedy. https://lnkd.in/ekCjmsq2 Asked how he went bankrupt, Hemingway answered, “Two ways. Gradually. Then suddenly.”

“Americans collectively owe over $1 trillion in credit card debt. But one generation carries the most, on average: Gen X.” “The average credit card balance for Gen Xers, defined at those between the ages of 43 and 58, rose to $9,123 in the third quarter of 2023, according to Experian’s latest available data. That marks the highest average credit card balance of any generational cohort.” “On an individual level, the overall average balance is around $6,501, per Experian’s data. Other generations’ credit card debt falls closer to that average or below.” “Although Gen Xers hold the most credit card debt by generation, millennials’ average balances increased the most, jumping by a little over 15% in the last quarter of 2023, compared with the last quarter of 2022. Gen Zers aren’t too far behind with their balances increasing by around 14%.” “A couple of factors may be contributing to the rise in credit card balances among all generations. The higher costs of electricity, auto insurance and heating combined with rising credit card interest rates may mean people have less money to chip away at their debt, Experian reports.” - Cheyenne D.

The financial pressures are mounting for many as credit card debt trends upwards, especially at a time when student loan payments are set to resume. This dual challenge places a substantial weight on countless individuals, creating stress and uncertainty. Debt relief can be an essential lifeline during these times. By helping to streamline and manage both credit card and student loan debts, these programs can offer breathing space and a structured plan. It's a beacon of hope for those seeking to regain financial stability and peace of mind. As the nation grapples with these challenges, it is vital to champion resources and solutions that make a difference in real lives. Every step toward financial wellness counts, especially when navigating through turbulent times. #RisingDebtChallenges #SeekingSolutions #FinancialRecovery

Under pressure? The three-and-a-half-year moratorium on student debt payments just ended, affecting roughly 40 million Americans who financed their educations with loans. Most of those borrowers are in the Millennial and Gen Z camps. But while the clock is back on, borrowers can make use of a one-year grace period and skip payments without penalty (though interest will still accrue). To that end, many borrowers have signaled they plan to take up the offer and delay making payments, at least for a few months. So while repaying loans could pinch some pocketbooks, the impact won’t be felt all at once—and we don’t think it’s enough to break the backs of broader consumers. Most who want a job still have one, and economy-wide household finances look well equipped to handle the challenges ahead. Overall, when adjusting U.S. household debt payments as a percentage of disposable income, things still look okay.

Under pressure? The three-and-a-half-year moratorium on student debt payments just ended, affecting roughly 40 million Americans who financed their educations with loans. Most of those borrowers are in the Millennial and Gen Z camps. But while the clock is back on, borrowers can make use of a one-year grace period and skip payments without penalty (though interest will still accrue). To that end, many borrowers have signaled they plan to take up the offer and delay making payments, at least for a few months. So while repaying loans could pinch some pocketbooks, the impact won’t be felt all at once—and we don’t think it’s enough to break the backs of broader consumers. Most who want a job still have one, and economy-wide household finances look well equipped to handle the challenges ahead. Overall, when adjusting U.S. household debt payments as a percentage of disposable income, things still look okay.