A recent report found an increase in the number of people carrying credit card debt across generations.
The number of Gen Xers with credit cards increased by 3%, Millennials increased by 5% and Gen Zers increased by a whopping 41%. Although this is a stunning percent increase compared to the older generations, Gen Z is paying their bills at approximately the same rate.
Credit cards are the most popular source of debt for Generation Z, with over 50% of the generation owning one or more credit cards. A borrow-now-worry-later mentality could play a role in credit card debt. Gen Zers seem to be borrowing money even if they have a fairly high income.
What are the risks of opening a credit card?
Credit card users may not understand the risks associated with interest rates. As older generations have seen, the interest rates on credit cards can strongly impact people’s ability to pay off their debt.
Risks associated with credit cards include:
- Borrowing more than you can afford to pay back
- Damaging your credit score
- Having to pay late fees and/or interest rates
- Impacting your ability to get other loans
It is important for credit card users to understand the risks before it’s too late. Credit card debt can go from bad to worse very quickly and is not easily relieved.
When does credit card debt go away?
There is a common misconception that credit card debt disappears when you die but that is not the case. Nearly 75% of consumers have debt when they die. Upon death, your assets will be used to pay off your debt, leaving your loved ones with a lesser inheritance.
A family member may have to pay off your debt if they co-signed a loan for you or owned property with you. Filing for bankruptcy may be the best way to eliminate your debt and make sure it does not get passed onto your family members.
Debt can be frightening and have a negative impact on your mental health. Before filing for bankruptcy, it may be helpful to speak with someone who has filed for bankruptcy. Speaking with a friend or an attorney may ease your stress and make the process easier.