I'm a Financial Expert: 5 Credit Card Risks Gen Z Is Ignoring Right Now

The myth that Gen Z doesn't use credit cards is crumbling under new data. But they might suffer the consequences of inexperience with the financial tool.

According to FICO's Spring 2026 Credit Insights Report, adults ages 18 to 29 are opening more credit cards than any other generation, and carrying average credit utilization rates comparable to millennials at about 44%.

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The report also found that 14.4% experienced credit score drops of 50 points or more over the past year. Financial experts say those trends indicate financial habits that can put Gen Z at risk for years. They shared the five credit card risks they're most concerned that Gen Z consumers are overlooking.

1. Treating Your Credit Card Like Part of Your Income

Groceries cost more. Rent keeps going up. Then your car needs repairs. A credit card can feel like the easiest way to get through the month.

Brian Page, founder of Modern Husbands and an accredited financial counselor and certified financial therapist, said this is often where people can get into trouble.

“Credit cards can create the illusion that a financial problem has been solved when it has simply been postponed,” he said.

Ashley Morgan, a debt and bankruptcy attorney at Ashley F. Morgan Law, PC, said she often sees people treat credit cards like emergency funds instead of using emergency savings. A March 2026 FICO consumer survey found that 48% of Gen Z relied on credit cards to make ends meet during periods of job loss or reduced income.

2. Assuming Temporary Debt Will Stay Temporary

“One of the biggest credit card risks I think Gen Z overlooks is that too often temporary debt becomes permanent debt,” said Morgan.

A credit card can help you get through a rough patch. But that balance can stick around for years if you have no specific plan to pay it off. Or worse, you can develop a habit of relying on credit cards to bridge gaps in your budget.

If you're not paying off each month's purchases in full, you're paying huge interest rates for the privilege of spending someone else's money.

3. Thinking a Good Credit Score Means You're Financially Healthy

Morgan said she regularly talks to people with credit scores in the 700s who are still under tremendous financial pressure because they're making minimum payments, using savings, relying on balance transfers or carrying balances month after month.

“A strong credit score can help you borrow money, but it does not tell you whether you have emergency savings, manageable debt or healthy financial habits,” said Page.

A good credit score can help you qualify for loans or lower interest rates. It can't tell you whether you're living paycheck to paycheck or making real financial progress.

4. Believing Carrying a Balance Helps Your Credit

"One of the most persistent myths is that carrying a balance helps your credit score," said Paige. "It does not. You can build excellent credit by using a card responsibly and paying the statement balance in full every month."

Morgan said she hears the same misconception from clients who intentionally leave balances on their cards because they believe it strengthens their credit profile.

A Capital One Insights Center survey found that 53% of Gen Z incorrectly believe carrying a balance each month is a good way to increase a credit score.

5. Opening Another Credit Card Instead of Fixing the Budget

Morgan said opening another credit card rarely solves the problem that created the debt in the first place.

“Opening a new card does not fix a budget problem. It simply delays it,” she said.

If income isn't covering expenses, another credit card may buy more time, but it won't solve the budget problem.

This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.

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