Millennials are sinking deeper into debt, adding a record $3.8 trillion to the tally at the end of 2022. Here’s what’s driving that — plus 3 tips to get you back on track to building wealth

Debt rising for millennials in their 30s at a record pace

Household debt hit $16.90 trillion in the last quarter of 2022, as consumers grappled with rising inflation and interest rates.

Millennials in their 30s have added over $3.8 trillion in debt to their accounts — and are missing their credit card and auto loan payments at startling rates as well, according to the New York Fed.

A staggering 73% of U.S. millennials are scraping by paycheck-to-paycheck, according to new data from finance and commerce research hub PYMNTS.com. Survey respondents in that age group cited debt payments and supporting dependent family members as the main drivers behind living that way.

And when you factor in the fact that housing affordability is at its lowest level in history, these young(ish) adults face an additional hurdle to building wealth.

“We are seeing a ‘credit gap’ emerge in the sense that younger, less-affluent borrowers are coming under financial pressure from higher living costs and inflation outpacing their income gains,” Silvio Tavares, chief executive of VantageScore, told The Wall Street Journal.

“We aren’t seeing that among older and more affluent borrowers.”

Read more: Boomer's remorse: Here are the top 5 ‘big money’ purchases you’ll (probably) regret in retirement and how to prepare for them

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Mortgage bills

Millennials may be in their prime homebuying years — but on top of the affordability crisis, they’re also currently contending with mortgage rates over 6%.

Across all age groups in the survey, mortgage debt makes up the biggest share of outstanding balances — with that number rising by nearly $1 trillion last year, according to the New York Fed.

Although now may not seem like the best time to refinance your home loan, rates are expected to fall later in the year — so you’ll want to keep an eye out for the chance to slash your monthly expenses or the lifetime cost of your loan.

Credit cards

Borrowers in their 30s are struggling with the highest credit card delinquency rates, according to the New York Fed — surpassing pre-pandemic norms now. That’s a massive shift from the peak pandemic times, when many consumers used all that cash they saved from not dining out, traveling or commuting to work to pay down debt.

With the average credit card interest rate is sitting at 23.8%, it's no surprise paying down credit card balances is increasingly a struggle for many Americans. When you don’t pay your credit card bill on time, any late fees combined with that higher interest rate will make it harder to chip away at that debt — and you risk harming your credit score as well.

If you’re juggling multiple credit accounts (and interest rates) at a time, it might be helpful to consolidate them into a single loan, so you’ve got just the one bill to keep track of and one interest rate to worry about each month.

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Auto loans

Aside from drivers in their 20s, this age group is also missing the most auto loan payments, says the New York Fed. Millennials as a whole currently make up the largest demographic of car buyers in the U.S.

Before buying a new set of wheels, make sure you’ve done the math and budgeted accordingly, and stay away from predatory loan rates. With a strong credit score, you could land a rate of between 6% to 8%.

But the best way to ensure you save on your car-related expenses is to shop around for the best rate on insurance — close to half of American motorists saw their premiums spike up in 2022.