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Gen Z is taking on debt faster than any previous generation at the same age. Average total debt for Gen Z reached about $25,000 in late 2025, up roughly 29% from two years earlier, according to Credit Karma. In absolute terms Gen Z still carries less than older generations, since they are younger, but the pace of accumulation is what stands out. And it is not just reckless spending: it reflects entering the workforce during historic inflation, housing costs far higher than a decade ago, and payment methods that blur the line between spending and borrowing. Here is what the data shows.
Key Takeaways
- Gen Z debt is growing fastest of any generation, up around 29% in two years, even though their absolute balances are smaller.
- The causes are largely structural: inflation, high rents, resumed student loans, and the rise of BNPL.
- BNPL is a hidden load: most Gen Z have used it, and many have paid late.
- Time is on their side, and clearing high-interest debt is the highest-impact first move.
Gen Z Debt by the Numbers (2026)
These are averages from recent industry reports, so individual situations vary widely.
| Debt type | Gen Z average | Notes |
|---|---|---|
| Total debt | ~$25,000 | Up about 29% from 2023, the fastest growth of any generation |
| Credit card debt | ~$3,500 to $3,800 | Growing fastest of any generation |
| Student loans (under 24) | ~$13,600 | Many have payments under $200/month |
| Auto loan (those with one) | ~$20,000 | Among the smallest balances of any generation |
| BNPL | Not fully tracked | About 64% of Gen Z have used it; roughly 45% of Gen Z users paid late in the past year |
Why Gen Z Carries More Debt Than Prior Generations at the Same Age
They entered the workforce during peak inflation
Gen Z’s early working years (2021 to 2025) coincided with the highest inflation in 40 years. Entry-level wages did not keep up with rent, groceries, and transportation. A 22-year-old paying $1,800 a month for a studio had far less left for savings and debt payoff than someone the same age a decade earlier, and credit cards became a gap-filler for basic living costs, not just extras.
BNPL normalized installment debt for small purchases
Gen Z was the first generation to treat Buy Now Pay Later as a normal payment method. A $200 pair of shoes became four payments of $50. Each amount feels manageable, but spread across multiple apps with different due dates, the total becomes a hidden load many did not fully account for. According to LendingTree’s 2026 data, about 45% of Gen Z BNPL users paid late in the past year, and most BNPL providers did not report on-time payments to credit bureaus until recently, so this debt often built up without building credit. For a deeper look, see our comparison of BNPL vs credit cards.
Student loan payments resumed
Federal student loan collections fully resumed by 2026 after the extended pause. For many who graduated between 2020 and 2023 and had never made a payment, the first bills landed alongside credit card bills and rising rent, compounding the stress.
Housing costs forced longer instability
Many Gen Z student borrowers have delayed buying a home or starting a business because of debt. Gen Z is also renting longer and at higher prices than prior generations, and when rent eats 40% to 50% of take-home pay, there is little room for the savings and payoff that build stability.
The Bright Spots
The picture is not all bleak. Some Gen Z are buying homes despite the headwinds, and the generation shows strong interest in personal finance, with money content reaching millions. Awareness is high even where the structural conditions have not improved.
Most importantly, Gen Z has the most time to recover of any generation. A 24-year-old with $25,000 in debt who tackles it over five years can be debt-free at 29 with decades of wealth-building ahead, an option older generations in the same spot do not have.
The Most Actionable Step Right Now
For most Gen Z adults in 2026, the highest-impact move is eliminating high-interest credit card debt before any goal except capturing the employer 401(k) match. At an average APR around 21%, credit card debt costs more per dollar than almost any other obligation, so clearing it is a near-guaranteed return. For a plan, see our guides on managing debt on an entry-level salary and whether to pay off debt or invest.
FAQ
How much debt does the average Gen Z have?
About $25,000 in total debt on average in late 2025, up roughly 29% in two years. Balances vary widely, and in absolute terms Gen Z still carries less than older generations.
Why is Gen Z in so much debt?
Largely structural reasons: high inflation early in their careers, expensive housing, resumed student loan payments, and the normalization of BNPL, not just overspending.
Is BNPL a big part of Gen Z debt?
It is a meaningful and hard-to-track part. Most Gen Z have used BNPL, and around 45% of Gen Z users have paid late, often without it building any credit.
What should Gen Z do first about debt?
Capture any employer 401(k) match, then attack high-interest credit card debt, which at around 21% costs more than almost anything else.
Bottom Line
Gen Z’s debt is growing faster than any generation before it, driven mostly by forces outside their control, but their biggest advantage is time. Clearing high-interest debt, being deliberate with BNPL, and building steady habits early can turn a tough start into decades of wealth-building. Awareness is high, and that is the first step. Building these habits is part of broader financial wellness.
This article is for educational and informational purposes only and is not financial advice. Figures are averages from industry reports and vary by individual. Consider a qualified professional for guidance on your situation.
