Only younger borrowers are experiencing a spike in past-due accounts, which may harm their credit ratings.

Inflation has made the transition to adulthood difficult for Generation Z. It's now putting them in debt at a vital stage in their financial growth.

According to a recent Credit Karma survey, members of Generation Z saw their average debt rise to $16,283 (£13,299) in the fourth quarter of last year, up 3.1% from the three months through May. It is the greatest growth of any generation, despite the fact that their total average debt was smaller than that of their elders.

With salary growth surpassing inflation in most regions of the United States, people are becoming more reliant on credit cards to make up the difference. But, Gen Z workers on entry-level incomes are having a harder time keeping up with the rising cost of living than their older peers.

While younger borrowers had the lowest average credit card debt at $2,781, growth exceeded all other generations at 5.9%. At 2.3%, Gen Z drivers had the highest rise in vehicle loan obligations.

Younger folks are not only incurring debt at a higher rate than older generations, but they are also falling behind on repayments. The only generation to show a rise in past-due accounts was Generation Z, which includes any credit card, mortgage, student loan, medical loan, vehicle lease, or auto loan account that is more than 30 days past due.

The increasing debt burden may have a detrimental influence on their credit ratings, which might have long-term ramifications for anything from apartment access to mortgages. Each unfavourable report on their credit history would have a greater impact on Gen Z customers, who already have the lowest average credit score at 653.

(Bloomberg.com, Creditkarma.com)