How Gen Zers Use Their Credit Cards, From Balances and Limits to On-Time Payments

As the youngest consumer generation, Gen Zers are becoming avid credit card users. Our newest study looks at how young Americans ages 18 to 26 use their credit cards by analyzing 198,000 anonymized credit reports of LendingTree users.

Of note, Gen Z’s average credit card balance has gone up 55.6% since February 2022, while its average credit card limit has climbed 22.2% in the same period.

Learn more about this cohort’s credit spending habits, whether they’re making payments on time, and which states are home to Gen Z cardholders with the highest and lowest average balances.

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Key findings

• Gen Zers have an average credit card balance of $2,889. That’s up 55.6% from $1,857 in February 2022.
• The highest average credit card balance among Gen Zers is in Hawaii at $3,643. Next are Gen Zers in New York state ($3,571) and Vermont ($3,361). Rhode Island Gen Zers had the highest average credit card balances in February 2022 at $2,824, but the state is now ninth at $3,256.
• The lowest average credit card balance among Gen Zers is in Mississippi at $1,907. The next highest are Alabama ($2,132) and West Virginia ($2,217) Gen Zers. South Dakota Gen Zers had the lowest average credit card balances in February 2022 at $1,126, but the state is just outside the 15 lowest now at $2,609.
• Gen Zers have an average credit card limit of $6,993. That’s up 22.2% from $5,721 in February 2022. Gen Zers’ average credit utilization ratio is 41.3% — meaning they use more than 40% of their available monthly credit.
• The highest average credit card limits among Gen Zers are in the District of Columbia ($8,846), Hawaii ($8,807) and New Jersey ($8,648). The lowest average credit card limits among Gen Zers are in Mississippi ($4,332), Alabama ($4,830) and West Virginia ($5,100).
• Gen Zers have an average of 3.41 credit cards. This is highest in California (3.80), New York (3.76) and New Jersey (3.75) and lowest in Wyoming (2.81), Alabama (2.89) and Mississippi (2.92).
• 17.3% of Gen Zers are authorized on at least one credit card account. Meanwhile, 3.7% of Gen Zers are authorized on multiple cards.
• More than 4 in 10 (40.6%) Gen Zers have opened a new credit card in the past six months. 
• 98.3% of Gen Zers pay their credit card bills on time every month. However, 5.5% of Gen Zers have a credit card account at least 90 days past due.

Average credit card balance spikes among Gen Zers

Gen Zers’ average credit card balance in February 2023 was $2,889. Gen Z cardholders on authorized accounts have slightly higher average balances than Gen Zers who directly hold their cards ($2,851 versus $2,530), which may have helped drive up the overall average. Still, compared to a LendingTree study that used February 2022 data, Gen Z’s average balances increased by 55.6% year over year from $1,857 — an increase of more than $1,000.

Average credit card balances (Gen Zers)

Source: Analysis of 198,000 anonymized credit reports of LendingTree users.

What may have caused balances to rise so rapidly? “Inflation and rising interest rates are a major reason for that growth,” says Matt Schulz, LendingTree chief credit analyst. Because Gen Zers are still in school or getting started with their careers, lower incomes and a limited credit history mean the credit they can get usually comes with really high interest rates — which can easily lead to credit card debt. “That adds up to a tough situation.”

Average credit card balances among Gen Zers are highest in Hawaii and lowest in Mississippi

Gen Zers in Hawaii, New York and Vermont lead the pack with the highest average credit card balances — $3,643, $3,571 and $3,361, respectively. They also happen to be among the most expensive states in which to live. When you factor in inflation, more people could be using their cards to make up for the higher costs of everyday living.

In last year’s analysis, Gen Zers from Rhode Island, Alaska and Hawaii had the three highest average balances. While Hawaii and Alaska remain in the top five this year, Rhode Island drops to ninth.

On the other end of the rankings, Gen Zers with the lowest average credit card balances were residents of Mississippi ($1,907), Alabama ($2,132) and West Virginia ($2,217), all lower cost-of-living states. Last year, South Dakota Gen Zers had the lowest average balance at $1,126, but the state is just outside the 15 lowest now with an average balance of $2,609. Among the three states with the lowest average balances in February 2023, Alabama had the lowest balance in February 2022 at $1,367 — seventh-lowest.

Average credit card balances by state (Gen Zers)

Source: Analysis of 198,000 anonymized credit reports of LendingTree users.

Average credit card limit jumps, too

Not only are average credit card balances up for Gen Zers, but so are average credit card limits — $6,993 in February 2023, 22.2% higher than in February 2022 ($5,721). Members of Gen Z authorized on someone else’s account have a much higher average limit of $10,092.

Schulz notes that the industry as a whole hasn’t necessarily been granting higher credit limits. “What could be happening is that those Gen Zers in the workforce are seeing their wages rise,” he says. “When that happens, credit limits can go higher, too.”

For example, when you get your first job out of college, you may go from a student credit card or a secured card with a small credit limit to a regular credit card with a higher limit. Or if you’ve been out of school a year or two and get your first real raise or change jobs for a bigger salary, that can help you get access to more credit as well, he says.

Average credit card limits (Gen Zers)

Source: Analysis of 198,000 anonymized credit reports of LendingTree users.

Higher credit limits aren’t bad unless they aren’t managed properly.

Credit utilization — the percentage of available credit you use — is the second most important factor in credit score calculations. Most experts recommend keeping your utilization below 30% and as close to 0% to maximize your credit score.

As for Gen Zers, their average credit utilization ratio as of February 2023 is 41.3%, up from 32.5% last February. That signals potential troubles ahead: For starters, it means they’re paying interest on revolving balances, and if their utilization continues to creep up, it could drop their credit scores.

Average credit utilization ratios (Gen Zers)

Source: Analysis of 198,000 anonymized credit reports of LendingTree users.

Average credit card limits among Gen Zers are highest in District of Columbia and lowest in Mississippi

Credit card limits also have a fairly big range depending on where Gen Zers live, with D.C. residents having the largest available credit, followed by Hawaii and New Jersey. One reason could be that people who work in or near major metro areas or live in affluent areas tend to have higher incomes, which can give them access to a higher credit limit once they get a card. It’s also worth noting that five of the top 10 are in the Northeast.

Last year, Rhode Island was in the top three with D.C. and Hawaii, but New Jersey had a much lower average credit limit ($6,172, versus $8,648 this year). It still made the top 10, but fell below Washington state, New York, Florida, California, Massachusetts and Colorado.

At the other end of the rankings, seven of the 10 lowest average credit card limit states are in the South. Mississippi, Alabama and West Virginia are at the bottom.

Average credit card limits by state (Gen Zers)

Source: Analysis of 198,000 anonymized credit reports of LendingTree users.

Where Gen Zers have the most credit cards

Overall, Gen Zers carry an average of 3.41 cards in their wallets in 2023 — up from 2.5 cards the year prior.

“That’s a fairly typical number for most any age,” says Schulz, noting that there’s no one-size-fits-all answer for the perfect number of cards. However, he cautions, for those new to credit, it’s probably best to take it slow.

“Once you have that first credit card, make sure you’re comfortable with it before you rush to get the second, third or fourth one,” Schulz says. “While getting started early is important because time is such a huge factor in credit, it’s every bit as important not to bite off more than you can chew and get yourself in trouble.”

Average number of credit cards (Gen Zers)

Source: Analysis of 198,000 anonymized credit reports of LendingTree users.

Average number of credit cards (Gen Zers)

Source: Analysis of 198,000 anonymized credit reports of LendingTree users.

More on Gen Z credit card usage: Authorized users, new cards, on-time payments

A good portion of Gen Zers (17.3%) are testing the credit waters as authorized users on someone else’s account — 3.7% of whom have more than one authorized card in their wallet. Being an authorized user is a great way to start building credit as long as the primary account holder manages their credit well. The authorized user should also use the card responsibly, since their activity will impact the primary cardholder’s credit.

At the same time, more Gen Zers have also developed the credit confidence to open their own cards, with just over four in 10 of them — 40.6%, to be exact — getting a new card in the past six months. While Schulz states that establishing your credit is good, he encourages Gen Zers to take it slow.

“Don’t apply for too much credit too often as that can raise red flags for lenders,” he says. “It can make you look desperate.” A couple a year is totally fine, he adds, as long as you’re managing the accounts responsibly.

On that note, despite an increase in average balances, 98.3% of Gen Zers pay their credit card bills on time every month. Considering that payment history is the top factor for determining a credit score, that’s a great sign.

On-time payments (Gen Zers)

Source: Analysis of 198,000 anonymized credit reports of LendingTree users.

On the downside, 5.5% of Gen Zers are at least 90 days past due on their credit card account, which can be a credit score killer.

4 tips for Gen Z credit cardholders

Using credit wisely early on can help you build a healthy credit score and access more favorable terms and rates on products. Consider following these strategies:

• Watch those balances. The average credit utilization ratio among Gen Zers (41.3%) is higher than the 30% or less recommendation that most credit experts cite. “Job No. 1 for any cardholder of any age is to pay off your balance as soon as possible,” Schulz says. “Doing so won’t just save you money and the burden of carrying that debt, it’ll help your utilization rate, too.”
• Set up autopay. While most Gen Zers pay their bills on time every month, missing payments because of carelessness can cause your credit score to plummet. “Nothing matters more to your credit than paying on time every time, so let technology help you,” Schulz suggests. “Set up autopay to pay at least the minimum each month, ideally more, and you’ve taken a big step in taking better control of your credit.”
• Don’t chase sign-up bonuses that require you to spend beyond your means. “We call them sign-up bonuses, but really they’re ‘sign up and spend $X amount in Y amount of time’ bonuses,” Schulz says. If you can’t meet the minimum spend requirements without blowing your budget, that’s not the card for you.
• Building credit is a marathon, not a sprint. You’re not going to have an 800 credit score right off the bat. “Building strong credit is about doing the right thing over and over and over again,” Schulz says. “You may make some credit mistakes, and that’s OK. You’re new at this. Learn from them and keep moving forward; your credit will be just fine.”

Methodology

LendingTree researchers analyzed 198,000 anonymized credit reports of LendingTree users in February 2023 to calculate average credit card balances, average credit card limits and average utilization ratios — among other things — for Gen Zers.

For this study, Gen Zers are defined as being born between 1997 and 2005 (ages 18 to 26 in 2023).