Millennials and Gen Z Are Drowning in Debt: What Sets Them Apart?

Debt has become one of the defining features of the American economy. The New York Fed reports that household balances reached $18.39 trillion in mid-2025, fueled by rising credit card, auto, and student loan obligations. Within that total, Millennials and Gen Z are experiencing two versions of the same crisis, one defined by volume, the other by volatility.

Let’s take a closer look at the debt profiles of these two demographics, and what sets them apart.

Credit Cards

Millennials carry larger balances. CNBC puts their average at $4,322. That’s a serious sum, and it reflects years of accumulated spending and reliance on revolving credit. What softens the blow is time. Millennials have longer credit histories, higher limits, and an average FICO of 690, according to Investopedia. That means they can spread debt across more accounts and avoid looking maxed out.

Gen Z’s average is $1,963 as of 2025, which is lower, but the context is harsher. Credit limits are tighter, and their average FICO is closer to 680 as reported by Experian. With fewer accounts and thinner histories, even a modest balance can push utilization into risky territory. One late payment can undo years of careful building.

Millennials carry more, but with more room. Gen Z carries less, but stumbles cost more.

Student Loans

Millennials carry historic student loan burdens, with an average of $40,438. Many borrowed heavily for graduate school, extending repayment timelines into decades. In fact, The New York Fed notes 10.2% of student loans are 90+ days delinquent, and a significant porton of them are from Millennials. These loans have shaped financial decisions for more than a decade. (Source: The New York Fed)

On the other hand, the average student loan balance of Gen Z is $21,574, which is lesser than millennials. However, their monthly squeeze is worse. Nasdaq estimates Gen Z borrowers pay around $300 each month, compared with $202 for Millennials. That higher payment reflects fewer income-driven repayment options and higher starting costs. For younger workers, it eats into budgets already stretched by rent and living expenses.

Millennials face a mountain of principal. Gen Z fights to keep up with cash flow. Both are stuck, just in different traps.

Buy Now, Pay Later

BNPL shows a stark shift. For Millennials, it’s used occasionally for retail purchases or to spread out a vacation cost. For Gen Z, it’s become a tool for everyday spending. A report from LendingTree found that 41% of BNPL users missed a payment, and 25% used it for groceries, compared to last year's 14%. That turns a short-term convenience into a long-term liability. And starting late 2025, Business Insider reports repayment history will feed into FICO scores. What looks like four easy payments today could determine whether a loan or apartment gets approved tomorrow.

The risk here isn’t the size of the debt, but the normalization of using short-term credit for basic needs.

Housing

Millennials arrived late to the housing market. The National Association of Realtors reports the median age of a first-time buyer is now 38, the highest ever recorded. Student debt delayed savings, pushing many into longer rental stretches.

For Gen Z, the bigger issue isn’t timing but affordability itself. Bankrate estimates that in many large metros, households need incomes of at least $100,000 to buy a median-priced home, with mortgage rates holding above 6.5%. Younger buyers with thin credit files, BNPL obligations, and smaller savings accounts find themselves excluded before they even apply.

In short, millennials postponed homeownership, while Gen Z, though not everyone, may never have the chance.

What Now?

Millennials need strategies that reduce the weight of large balances, such as refinancing where possible, consolidating, and prioritizing high-interest accounts, while Gen Z needs strategies that protect fragile credit files, which are keeping utilization low, avoiding BNPL for essentials, and automating payments to prevent small lapses.

The problems are different, but the answer is the same: structure.

At My Debt Navigator, our Clarity, Categorize, Chart process forces every debt into one view, from student loans to credit cards to BNPL. Once it’s visible, it can be ranked and tackled with a plan.

Debt doesn’t shrink when ignored. It shrinks when faced. And whether you’re carrying a mountain or balancing on a wire, the first step is always to reach out.

Face your debt with a plan. Start your reset with My Debt Navigator today.