NEW YORK — Members of Generation Z are opening credit cards at higher rates than any other age group, as many turn to borrowing to manage financial pressures, according to a report by FICO.
More than 25% of Gen Z adults ages 18 to 29 with a FICO score opened at least one new credit card in the past year, the highest rate among all generations, Yahoo Finance reported, citing FICO data.
The increase appears tied in part to economic strain. Nearly half — 48% — of Gen Z respondents said they relied on credit cards to cover expenses following a job loss or income reduction over the past year, compared with 43% of millennials, 25% of Generation X and 7% of baby boomers, according to FICO Vice President Jenelle Dito, as reported by Yahoo Finance.
Overall, nearly four in 10 Gen Z consumers said they opened credit cards to create a financial cushion.
Cutting Back on Savings
The borrowing trends come as many younger consumers report cutting back on savings. More than 60% of older Gen Z adults said earlier this year they had reduced or stopped retirement contributions in recent months, while two-thirds said competing financial demands limited their ability to save, Yahoo Finance reported, citing separate research.
At the same time, some data points suggest increased engagement with retirement accounts. Fidelity data cited by Yahoo Finance showed 34% of Gen Z individual retirement accounts received contributions between Jan. 1 and March 20, compared with 20% for millennials and 13% for Generation X.
Despite that activity, Gen Z’s credit profiles are weakening. As of late 2025, the group’s average credit score stood at 678, down three points from a year earlier and below the national average of 714, placing many borrowers in the “fair” to “good” range, according to FICO data reported by Yahoo Finance.
Role of Student Loan Payments
FICO attributed some of the decline to the resumption of student loan payments. Ethan Dornhelm, head of scores analytics at FICO, said the restart of required payments has “nudged the average score slightly lower,” according to Yahoo Finance.
FICO data cited by Yahoo Finance show that about one-third of student loan borrowers — roughly 7.1 million people — recorded a new delinquency on their credit reports after payments resumed, resulting in an average credit score drop of 62 points since January 2025.
Younger consumers also are carrying growing balances. Gen Z borrowers held an average credit card balance of $3,493 last year, according to Experian data cited by Yahoo Finance.
Another Contributing Factor
Financial pressures tied to wages and rising costs are contributing to the trend, J. Victor Conrad, a certified financial planner and founder of Pinnacle Financial Strategies in Pennsylvania, told Yahoo Finance.
“When someone in this age range doesn’t have a lot of cushion in their monthly cash flow and they get either a little bit behind, or salary increases are not keeping up with the cost of living, it’s easy to see how this happens,” Conrad said, according to Yahoo Finance.
