The majority of American millennials (72%) owe around $117,000 in non-mortgage debt, making it difficult for them to save or plan for the future, according to a recent survey.
Real Estate Witch surveyed 1,000 millennials – the generation born between 1981 and 1996 – about their finances, savings and credit history and said these debt holders struggled to pay basic expenses.
For example, 27% of respondents said they couldn’t afford gasoline, 29% said they couldn’t afford to pay their mortgage, and 27% said they couldn’t afford gasoline. ‘they couldn’t afford medical care.
The majority of survey respondents said they thought they could pay off their debt in five years. However, one in 10 respondents said they thought it would take at least a decade to repay, and one in 16 said they would never be able to repay their debt.
“The generation’s debt burden may also make it harder to pay for discretionary expenses, such as vacations (45%), which could improve their quality of life,” Real Estate Witch said. “It may also explain why millennials are slow to reach traditional markers of adulthood, like starting a family.”
If you’re having financial difficulty, you might consider taking out a personal loan to help you pay off high-interest debt at a lower rate, saving you money each month. Visit Credible to find your personalized interest rate without affecting your credit score.
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Credit card debt comes first
The survey found that the biggest culprit of millennial debt is credit card spending, with 67% of respondents having an average balance of $5,349.
Credit card debt jumped $46 billion, or 13%, at the end of the second quarter of 2022, the largest percentage increase in more than 20 years, according to the Federal Reserve Bank of New York. In addition to credit card balances, Americans also opened 233 million new credit card accounts in the second quarter, the most since 2008.
More than a quarter of survey respondents (29%) said they don’t pay their credit card bill in full each month, and 23% of these delinquent borrowers have more than $10,000 in debt.
“Among Millennials, credit card debt tends to increase with age,” said the Real Estate Witch survey. “Geriatric millennials, who are further along in their credit journey, have an average credit card balance of $6,048, about 20% higher than younger millennials.”
If you need help paying off your credit card debt, you can consider consolidating it with a personal loan at a lower interest rate, which will save you money each month. Visit Credible to find your personalized interest rate without affecting your credit score.
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Student loan debt adds to generational finance problems
Student loans were the second most common source of debt for millennials, with 48% of survey respondents citing it as the reason for their financial troubles.
According to the survey, those with student loans reported having much higher debt than those with unpaid credit card bills. More than half (54%) of millennials with student loans said they owed between $10,000 and $99,999, and those studying in graduate programs (12%) had outstanding debt of $100. 000 to $199,999. The survey also found that 40% of millennials with student loans don’t know the interest rate on their debt.
“Millennials with debt may find it harder to start a family, buy a home and save for retirement than those without debt,” Real Estate Witch said. “Of those who currently have no debt, more than 1 in 4 (28%) say it’s because they’ve never taken student loans.”
Millennials with student debt could get help through the student loan relief plan announced by President Joe Biden in August. The Biden administration announced the cancellation of $20,000 in student loans per borrower if they went to college on Pell grants and $10,000 in student loan debt per borrower for those who did not. The cancellation applies to all federal student loan borrowers earning less than $125,000 per year or $250,000 per year for married couples. They also unveiled a proposal that would allow those with undergraduate loans to be able to cap their repayment at 5% of their monthly income.
If you have private student loans, these will not be eligible for federal student debt forgiveness. However, you can lower your monthly payment by refinancing at a lower interest rate. Visit Credible to find your personalized interest rate without affecting your credit score.
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