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Credit card debt increases among older Americans

By ksl.com | Posted - Feb 23rd, 2013 @ 8:26pm



SALT LAKE CITY — With automatic sequestration cuts just around the corner, many have the federal budget on the forefront of their minds. But a recent survey by Demos, together with AARP, suggests that individual households might benefit from having their own sequestration.

The 2012 study showed that middle-income Americans age 50 or older are carrying more credit card debt on average than younger people. What's particularly worrisome about these findings is that more households are carrying more card debt closer to or in their retirement years.

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Other key findings from the survey:
  • Half of Americans age 50+ carried medical expenses on their credit cards. Prescription drugs and dental expenses were the main contributors.
  • A quarter of older households said loss of a job contributed to their credit card debt in the last three years.
  • Nearly one in five (18 percent) older Americans nearing retirement said they dipped into retirement funds to pay down credit card debt.
  • Older Americans were twice as likely as those under age 50 to take on credit card debt to assistother family members (23 percent vs. 11 percent).

Specifically, "the report showed that older households carried an average credit card balance of $8,278 in 2012. For those under 50, credit card debt averaged $6,258," according to Amy Traub of Demos. That's a difference of 32 percent.

But the increase in card debt may not reflect an increase in lack of personal financial responsibility. Middle-income Americans may be feeling the reality of difficult economic times and are using cards to pay for essential needs.

For example, the survey points out that 34 percent of Americans age 50 plus use credit cards to pay for basic living expenses such as rent or mortgage payments, groceries, utilities or insurance because they do not have enough money in their checking or savings accounts.

In an interview for USA Today, Barry Rand, AARP CEO, said, "The Great Recession and the ongoing financial crisis have only tightened the squeeze on middle-class families and have cast a shadow on the future retirement prospects of today's workers."

It is easy to over-react to surveys like this, as Deseret News columnist Jay Evensen writes.

"The report offers a glimpse at a portion of the public that lives above its means, but not all people with credit card debts are irresponsible," Evensen wrote.

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