Gen Xers Carry the Most Credit Card Debt, Study Finds

When it comes to credit card debt, Gen Xers may be struggling the most.

The average amount owed by people in this cohort is $7,004, according to a new report from New York Life. That compares to $6,785 for Baby Boomers, $5,928 for Millennials, and $2,876 for Gen Z.

“I think Gen Xers may be especially squeezed by credit card debt because they’re going through expensive years right now,” said Ted Rossman, senior industry analyst for CreditCards.com. Research from CreditCards.com also shows that more Gen Xers (77%) have any type of personal debt compared to other age groups.

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“They might be sandwiched between caring for elderly parents and raising their own kids — maybe even putting them through college,” Rossman said.

The New York Life study, based on a December survey of 4,410 American adults, defines baby boomers as people between the ages of 59 and 77; Gen Xers, ages 43-58; Generation Y, aged 27 to 42; and Gen Z from 11 to 26 years old.

Credit card balances across all age groups hit $930 billion in the third quarter of 2022, according to the Federal Reserve Bank of New York’s latest quarterly household debt report. That amount was $38 billion more than the previous quarter and $121 billion more than a year earlier, marking the biggest annual jump – 15% – in more than 20 years.

And as interest rates have risen – due to the Federal Reserve’s attempt to contain high inflation – the cost of credit card debt has become more expensive.

The average credit card now charges a record 20.16%, Rossman said. Additionally, 46% of cardholders have monthly debt on at least one card, up from 39% a year ago.

The average credit card debt owed by adults of all ages is $6,321, and the average monthly amount spent on that debt is $430, according to the New York Life study.

The time it would take to pay off that average balance at that monthly amount depends on the interest rate. At zero percent, it would take 15 months. At 20%, it would take 18 months and about $1,028 would be in interest.

These calculations, made using Credit Karma’s credit card calculator, also assume that no additional credit card debt was incurred when repaying this amount.

There are several ways to pay off your credit card balance faster.

For example, some people approach debt using the “snowball method,” which involves paying off the smaller balance first, then moving on to the larger balance, and so on.

It works like this: you pay the minimum on your high balance cards to avoid late fees or higher interest charges, then throw as much money as you can on the smaller debt until she is reimbursed. Then you apply the same strategy to the next largest balance. The idea is that clearing balances can be empowering and motivate you to keep paying all your cards.

If you don’t need the positive reinforcement, you can focus on the debt with the highest interest rate first. In the long run, this “avalanche method” – from the highest rate to the lowest – will save you the most on interest charges.

Additionally, there are 0% balance transfer cards that you may be able to get, depending on your credit score. The higher your score, the better terms and conditions you can get.

Or, a personal loan could help you consolidate debt. “These rates go down to about 7% if you have good credit,” Rossman said.

You should also consider whether you can reduce your expenses or increase your income, which could free up some cash.

“You could deal on one side, sell things you don’t need, and/or cut spending to find more money to spend on your credit card debt,” Rossman said.