Global Ranking of Credit Card Debt: Gen Z's Struggles with Overdue Payments

by John WilsonDecember 11, 20245 minutes read

The financial pressures faced by Gen Z are becoming more evident as rising credit card debt and overdue payments are taking a toll on young people worldwide. With many struggling to manage their finances, the credit card debt burden continues to grow, especially among younger generations. Some countries are seeing higher rates of overdue payments, signaling the increasing difficulty young adults face in keeping up with financial obligations.

Top 10 Largest Economies' Average Credit Card Debt

Based on the latest data available, here is the ranking of the median credit card debt in the top 10 economies by GDP, converted into U.S. dollars:

USA: The highest median credit card debt — $5,910

As the world’s largest economy, the United States holds the highest median credit card debt. Rising interest rates and inflation have pushed credit card balances to higher levels, making it harder for Americans to manage their finances.

India: The lowest median credit card debt — $302

In comparison to other high-GDP countries, India has the lowest median credit card balance. The lower cost of living in India compared to nations like the United States makes it difficult to directly compare credit card usage across these countries.

Gen Z's Credit Card Debt is the Most Severe

Individuals under the age of 30 are still in the early stages of their careers and typically lack the financial security that older generations have accumulated over several decades. These younger individuals are more likely to rent homes instead of owning them, which makes them vulnerable to rising housing costs, further limiting their ability to save.

According to an analysis by The New York Times of Education Department data, nearly half of student loan borrowers, across all age groups, have not resumed payments since the pause ended last October, following a three-year break.

The Federal Reserve’s recent report shows that over 10% of credit card users aged 18-29 are significantly behind on their payments, surpassing pre-pandemic levels. With a median credit limit of $4,500, this group is more likely to max out their credit cards compared to older generations.

Young consumers also face the highest delinquency rates on car loans across all age groups. As of recent data, 5% of auto loans held by individuals aged 18-29 are at risk of repossession, which is higher than the less than 4% observed before the pandemic.

Since the Federal Reserve raised interest rates in 2022, the typical rate for a six-year car loan has risen to 8.3%, nearly twice the rates seen in the past decade. This, combined with increasing prices for both new and used cars, has worsened the financial strain, though used car prices have dropped significantly from their 2022 peak.

How Can Young People Reduce Credit Card Debt?

Create a Realistic Budget

A detailed budget is essential for managing credit card debt. The first step is to understand how much money you earn and where it goes. Categorizing expenses into needs and wants allows you to make informed decisions on where to cut back. Once the budget is in place, make sure to allocate a portion of your income specifically for debt repayment. This can help prevent overspending on non-essential items while ensuring that credit card payments are prioritized.

Pay More than the Minimum Payment

The minimum payment on credit cards is often just a small portion of the balance, which means most of the payment goes toward interest rather than reducing the principal balance. This leads to a cycle of debt that’s difficult to break. Aim to pay as much as possible above the minimum each month. Even small increases in your monthly payment can significantly shorten the debt repayment period and reduce the overall interest paid. For instance, paying an extra $50 to $100 a month could make a substantial difference in how long it takes to pay off the debt.

Consolidate Debt for Easier Management

If you have multiple credit card balances, consolidating them into one loan with a lower interest rate can simplify repayment. A personal loan or balance transfer credit card could be good options, depending on your credit score and the loan terms available. By consolidating debt, you’ll only need to focus on one payment, and if the interest rate is lower than your existing credit cards, you'll save money on interest payments. Make sure to read the fine print of any consolidation option to avoid hidden fees or interest hikes.

Cut Back on Non-Essential Spending

Review your monthly expenditures to identify areas where you can cut back. Non-essential items like dining out, shopping for clothes, or subscriptions to streaming services can add up quickly. Reducing these expenses temporarily can free up additional funds to put toward paying down your credit card debt. This requires a mindset shift where prioritizing financial health takes precedence over instant gratification.

Negotiate a Lower Interest Rate

Many credit card companies offer introductory 0% APR periods for balance transfers or new purchases, but existing cardholders may also have the option to negotiate for a lower interest rate. If you have a good payment history and a reasonable credit score, your credit card issuer may be willing to reduce the interest rate, which will lower the cost of carrying a balance. Contact customer service and ask for a rate reduction. It’s a simple step that can save money over time, especially if you have a high-interest rate card .

Consider Credit Counseling or Debt Management Plans

For those who are struggling to manage multiple debts, credit counseling services can help. These nonprofit organizations offer expert advice on how to handle credit card debt and may even help negotiate with creditors on your behalf. A Debt Management Plan (DMP) can consolidate payments and reduce interest rates, often making it easier to pay off debts over time. While enrolling in a DMP may have an impact on your credit score, it can provide long-term benefits by improving your financial management skills and helping you pay off debts in a structured way.

Monitor Your Progress and Celebrate Milestones

Lastly, it’s essential to track your progress toward debt repayment. Keep an eye on your credit card balances and use tools like debt calculators to see how long it will take to pay off your balance based on your current payment rate. Celebrating small victories, like paying off a credit card or reducing your balance by a certain percentage, can provide motivation to keep going. The key is consistency and patience as you work toward financial freedom.