Young Americans drowning in credit card debt as delinquency rates climb near 10% in Q2

Young Americans continued to make up the largest share of those transitioning into credit card delinquency in the second quarter, according to a report released by the New York Federal Reserve.

Despite ticking down slightly from the previous quarter, the report showed that nearly 10% of credit card balances held by Americans aged 18-29 became 90 or more days overdue in the second quarter. 

New York Fed researchers said credit card delinquency rates for Americans under 40 have been “unusually elevated,” adding they are keeping a “close eye” on the trend. 

The rate of balances transitioning into serious delinquency for 18-29-year-olds has hovered around the 10% mark since 2023. Before then, the last time the rate eclipsed 10% was in 2010. 

AMERICANS’ CREDIT CARD AND HOUSEHOLD DEBT REACH ALL-TIME HIGH

The report comes after data painted an increasingly shaky picture of the financial security of members of Gen Z. A separate report by the New York Fed found that the unemployment rate for recent college graduates aged 22-27 had spiked from post-pandemic lows, and is 0.7% higher than the national rate as of June. 

Excluding the pandemic, the unemployment rate for recent college graduates in March 2025 was the highest in more than a decade.

Meanwhile, data shows that members of Gen Z are becoming increasingly spread thin by both new and traditional credit services. A Bank of America Institute Report from June 2025 found that “buy now, pay later” (BNPL) usage among members of Gen Z accelerated in the last year after three years of slowing growth. 

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Though most BNPL lenders do not report payments to credit bureaus, New York Fed researchers said that usage of BNPL was much higher among younger borrowers compared to those in other age groups. Affirm has begun reporting payment history to Experian and Transunion.

Researchers said their findings suggest typical BNPL purchases were fairly small, ranging from $600 to $1,000, though, “from what we’re hearing … now it’s extended to even smaller purchases, like even a cup of coffee.” 

As of the second quarter of 2025, Americans’ credit card balances totaled $1.21 trillion.