(WJET/WFXP/YourErie.com) Based on over 340,000 anonymous credit reports, a study from online loan marketplace LendingTree shows millennials have made significant improvements to paying off their debt in the past two years. However, baby boomers have increased theirs.
From 2019 to 2021, Generation X (born between 1965 and 1980), Millennials (born between 1981 and 1996) and Z (Born 1997 to 2012) all reduced their debt, on average. Millennials, specifically, lowered their average debt by $9,117, the largest amount among the age groups, while Generation Z took theirs down by 17 percent, the largest percentage. According to the data, Generation Z’s debt shifted away from student loans — which dropped to 24.6 percent in 2021 from 30.2 percent in 2019 — toward auto loans, which became an increasing percentage of their debt.
Matt Schulz, chief credit analyst at LendingTree, believes the economic stimulus payments played a part in this development because there were not many places to spend money during the COVID-19 shutdown.
“As a result [of the stimulus checks], millions of Americans put a lot of that extra cash toward knocking down their credit card balances and other high-interest payments,” Schulz said.
Meanwhile, Baby boomers (born between 1946 and 1964) added an average of $8,848 to their total average debt, an increase of 6.7 percent, in that same span. The analysts at LendingTree believe the low mortgage and personal loan interest rates enticed many of the older generation to spend more money.
“In most cases, the pandemic wasn’t the economic meltdown for baby boomers that it was for younger generations,” Schulz said. “So many boomers may have still felt comfortable taking on a little bit of extra debt because they felt secure in their financial situation.”
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