Origin of credit cards, home loans and other financial products were affected during this period. covid-19 pandemic As consumers tightened their budgets and were more conservative with their spending. Nearly two years into the global health crisis, demand for credit has nearly doubled — and it’s driven by Gen Z consumers, according to a New report from TransUnion.
Between Q1 2020 and Q2 2021, new credit originations increased from 8.6 million to a record 19.3 million, the report found. While millennials still move forward with the largest share of origins, the the youngest generation of americans Taking loans at a fast growing rate.
According to Matt Comos, TransUnion Senior Vice President, much of this generational growth follows a natural trajectory when consumers need financial products at different stages of their lives.
“From a generational perspective, consumers follow a pattern of credit needs as they go through life events,” Comos said.
This includes taking out a credit card, buying a car and even taking out a home loan during college – financial milestones that are common for consumers aged 18-26.
Also, Gen Z consumers have more confidence in their ability to borrow money due to Positive economic conditions when they were coming of age. Because of this, Gen Z “returned very quickly” when it comes to the post-pandemic financial recovery, Comos said.
Access to online financial tools has also played an important role in helping digital-native Gen Z consumers thrive during this period. They can check their credit scores, compare interest rates for financial products, and even see their estimated payment terms. mortgage calculator, all from your smartphone.
“It is transformative in how consumers engage with and understand credit,” Comos said. “Overall, it’s great for the credit ecosystem.”
In addition to rolling out new financial products, Gen Z consumers are also increasing their credit balances. Average balance per Gen Z cardholder grew 13.9% year-over-year, compared to 1.8% for Millennials.
Increase in credit balance can be harmful for any reason credit card balance If carried forward month after month, interest will be charged. The good news is that the serious crime rate among Gen Z declined from 2.31% in Q3 2019 to 1.52% in Q3 2021.
As the youngest generation of consumers demand access to financial products, it is important for Gen Z consumers to research the best credit options for their needs, including credit cards. If you’re considering opening a new credit card account, make sure Compare terms across multiple issuers To find the best credit card offers for your needs. You can check out interest rates, rewards programs and sign-up bonuses on Credible for free.
how to choose a credit card
With so many credit cards on the market, it can seem like a challenge to find which one will be most beneficial to your financial goals. follow these steps to choose the best credit card For your unique needs:
- Check your credit score. The higher your credit score, the better your chances of getting approved for a card with favorable terms like credit limit and low interest rate. If you have a low-established credit report, consider removing one. secured credit card With a security deposit to build your score.
- Identify your financial goals. There are many types of credit cards, from cashback card To help you earn up to 5% back on daily purchases for Travel Rewards cards that accrue airline miles that you can use for flights and hotels. you can also use a balance transfer card Which helps you save money on interest with 0% introductory APR offer.
- Consider the conditions. Credit card interest rates vary widely depending on your credit history, credit card issuer, and the type of card you need. you should also Consider Annual fees, late payment fees, balance transfer fees and foreign transaction fees. The card’s annual percentage rate (APR) will give you the most accurate picture of the cost of credit.
Keep in mind that withdrawing a credit card will require the following: hard credit check, which will temporarily lower your credit score. Additionally, the number of credit cards you have and the average credit age Will affect your overall score on your account.
But there’s good news: Since opening a new card will give you access to a new credit line, it will increase your overall credit limit and lower your credit limit. credit utilization ratio. This can improve your credit score, but be careful in controlling your spending. You should pay your credit card statement balance in full every month to avoid paying interest.
You can do this Compare all types of credit cards, from rewards cards to balance-transfer credit cards on Credible’s online marketplace. Doing so will not affect your credit score.
Tip: Keep existing credit card debt under control
Credit cards offer perks unmatched by other financial products, but those rewards can come at a high price if you’re paying interest. The average interest rate assessed on credit cards in August 2021 was 17.13% according to the Federal Reserve, which is close to the highest level ever recorded.
If you can’t live with an ever-increasing credit balance, consider Consolidating Your Credit Card Debt in a personal loan. These are one-time loans that you repay with a fixed interest rate and loan term, so your monthly payments will remain the same. Unlike credit cards, personal loans offer a more predictable loan repayment schedule.
More importantly, personal loans with lower interest rates can be able to save you money over time. The average rate on a two-year personal loan is 9.39%, per fed data. By paying off your credit card debt at a lower, fixed rate, you may be able to reduce your monthly payment and save thousands in interest.
a Recent reliable studies found that credit card users have the potential to save about $2,400 and reduce their monthly payments by $66 by consolidating debt with a personal loan.
You have questions related to finance, but don’t know what to ask? Email a trusted money expert [email protected] And your question can be answered by credible in our Money Expert column.