2024-05-12 00:43:35
Salaries are not rising, but rents are up 22% in 10 years.
As interest rates rise, the debt grows bigger… lower credit score
Analysis has shown that Generation Z (the generation born between the mid-1990s and early 2000s) in the United States is falling into credit card debt as rents and living costs soar due to inflation.
The Wall Street Journal (WSJ) reported on the 7th (local time), “Young Americans are starting out with more credit card debt than previous generations.”
This article, titled ‘Generation Z is sinking deeper into debt,’ states that while the average annual salary of young people graduating from college has not increased significantly, the debt ratio of the younger generation is increasing due to a surge in rent due to inflation and an increase in the minimum cost of living. pointed out.
In particular, in the United States, it is said that many people stick to credit cards because it is possible to use credit cards within the limit as long as you pay the minimum amount.
◆American Generation Z, new credit card bill increase 26% in 10 years
According to credit bureau TransUnion, the average credit card bill for 22-24 year olds in the United States in the fourth quarter of last year was $2,834 (approximately 3.85 million won), a 26% increase compared to 2013 ($2,248) 10 years ago.
“This generation is experiencing greater financial stress than millennials did 10 years ago,” said Charlie Wise, global head of research at TransUnion.
In the United States, you can choose to pay in a lump sum or in installments after using a credit card. However, if you pay in installments, you must repay at least $50 (about 68,350 won) per month.
This means that if you pay only the minimum amount, you can continue to use the credit card within the limit even if you do not repay the entire amount.
In particular, WSJ’s diagnosis is that Generation Z is falling into a swamp of credit card debt as rents and living costs have soared due to recent inflation.
◆The average salary of college graduates remains the same, but rents soar
According to the Federal Reserve Bank of New York, the average annual salary of a college graduate was $60,000 (about 82.05 million won) last year. This is an increase of 1.94% compared to the average annual salary of $58,858 (approximately 80,488,315 won) in 2020.
However, during the same period, the average rent in the United States increased by about 22%.
According to the online rental marketplace ‘Rent’, the average rent as of last January was $1,987 (about 2.71 million won), which is $23,844 (about 32.6 million won) per year. WSJ pointed out that this is an amount equivalent to at least one-third of the average worker’s monthly salary.
“Young people have always had lower wealth on average than others,” said Scott Polford, chief economist at the Consumer Financial Protection Bureau (CFPB). .
In fact, Andriana Cubillo (26), an office worker living in Salt Lake City, USA, is currently living in a one-bedroom apartment paying $1,200 (about 1,640,400 won) in rent. When she moved in a year ago, her rent was $1,000 (about 1,367,000 won), a 20 percent increase in just one year.
Mr. Cubillo, who works as a customer service representative at an insurance company and earns $30,000 (about 41.02 million won) a year, spends a quarter of his annual salary on rent, and after paying for groceries and gas bills with three credit cards, the only money left is It is said to cost only $1,500 (about 2,050,500 won).
“When I was young, I thought I would be able to live my own life as an adult, but the economic situation is making that difficult,” Cubillo said.
◆Opening a credit card during the pandemic↑… Credit score down due to interest rate hike
In particular, it was found that Generation Z in the United States opened credit cards at a faster rate than other generations during the COVID-19 pandemic. This was the effect of credit card companies relaxing card issuance qualifications at the time.
According to data from Vintage Score, about 5% of Americans opened at least one credit card account in March 2020 during the pandemic.
However, as interest rates have risen rapidly over the past two years, debt has also increased sharply, and as a result, Generation Z’s credit scores are said to have dropped significantly.
There is analysis that the situation of the American younger generation mired in debt could have an impact on their long-term life goals.
WSJ said, “Young people with a lot of debt have a higher rate of delinquency on credit card payments,” and “Economists point out that this often delays important points in life, including home ownership and marriage.”
[서울=뉴시스]
2024-05-12 00:43:35