Americans are in debt by a combined $16.9 trillion, with that financial burden weighing especially heavily on older millennials, new government data shows.
People ages 30 to 38 account for nearly $4 trillion of total household debt in the U.S. For millennials, that’s a 27% increase in debt compared to 2019 — a steeper hike than any other generation, Yahoo Finance reporter Akiko Fujita told CBS News.
Millennials are racking up debt due to soaring inflation, Fujita noted. Consumer prices have skyrocketed in the last year, particularly for gas, child care and food.
“You’ve also got the [Federal Reserve] raising interest rates at a very rapid pace, which means higher rates for your credit card [and] your car payments,” she said.
The economy’s swift rebound from the pandemic, coupled with surgiing inflation, has spurred the Federal Reserve to sharply hike its benchmark interest rate in an effort to curb prices and slow wage growth. The central bank’s aggressive monetary tightening has lifted borrowing costs.
For example, a record share of Americans are paying more than $1,000 a month for their car note now that auto loans rates are north of 6% for new and used vehicles. The average credit card rate in the U.S. is now 20.3%, up from 17.9% six months ago, according to CreditCards.com.
Fujita said there are a few ways millennials can start paying off their debt, including using their tax refund to chip away at the balance. Another option is to consolidate those debts by getting a personal loan, using the funds to pay off the credit card balances and then repay the one loan.
Fujita also recommended calling your credit card issuer and simply asking for a lower interest rate.
“Sure, you may not get it down to 0, but you get it down from what is now a roughly 20% APR,” she said.
Editor’s note: The headline on this story has been updated.
Khristopher J. Brooks is a reporter for CBS MoneyWatch covering business, consumer and financial stories that range from economic inequality and housing issues to bankruptcies and the business of sports.
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