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Young Americans Incur More Debt, Pay It Off More Slowly, Study Says

Young Americans take on more credit card debt than previous generations did and are slower to repay it, according to research released last week.


New evidence suggests that those in their late 20s and 30s will continue a lifelong borrowing trend, never quite breaking free from credit card debt. A related survey found that most people in their early 20s spend more than they earn every single month.


Increasing Debts, Decreasing Payments


The ongoing study, conducted by Ohio State University’s Center for Human Resource Research, sampled spending and repayment information for individuals in three generations. It found that those born between 1980 and 1984 rack up debt at higher rates than their parents’ generation (born 1950 to 1954) or their grandparents’ generation (born 1920 to 1924).


Members of the youngest generation, Generation Y, had about $5,700 more in credit card debt than baby boomers did at their age. Members of Gen Y also had $8,200 more debt than the oldest generation, the GI Generation, during the same stage of life.


Besides incurring more debt, younger people are likely to take longer to repay those debts. Baby boomers pay their credit card balances at a rate 24 percentage points higher than the rate paid by Gen Yers. Additionally, those in the GI Generation have a payoff rate 77 percentage points higher than the youngest debtors.


Living Beyond a Budget


While these statistics shed some light on the debt culture, they don’t show the full extent of younger generations’ issues with money.


A similar study by found that among renters aged 18 to 24, more than 75 percent spend more than they earn each month. And one in five spend more than $100 more than they make each month. In a single year, that amounts to $1,200 of debt in addition to any existing balances.


The study found that most people didn’t overspend on discretionary items like shopping. In fact, the top expense for 42 percent of respondents was rent.  Another 22 percent said food was their largest expense, while 18 percent reported that transportation used the biggest chunk of money.


Reasons for the Shift


A big reason for the shift is changes in higher education. College is now more necessary in the general job market and is no longer reserved for a select few. It’s also more expensive than it once was, with cost increases far surpassing general inflation rates. This means more young people are taking out larger student loans.


The shift could also be a result of an increasingly consumerist society. The GI Generation grew up during the Depression, while baby boomers faced the Cold War. The youngest generation, in contrast, has an unrivaled ability to spend and is encouraged to do so.


The shift toward increasing debt has long-lasting effects. Younger Americans are waiting longer to take on larger financial obligations like homeownership and starting families. For some, it also means postponing retirement savings. These studies show that today’s 20-somethings will carry credit card debt into their retirement years, which can severely diminish their ability to live comfortably without working.

Katherine Pilnick is a writer for She educates readers about their various personal finance options. She is a graduate of New York University.

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    1. White, M.C. (2013, January 17). Today’s Young Adults Will Never Pay Off Their Credit Card Debts. Time: Business & Money. Retrieved from
    2. Grabmeier, J. (2013, January 14). Credit card debt: Younger people borrow more heavily and repay more slowly, study finds. Retrieved from