Seniors are racking up credit debts at an alarming rate, says industry experts. Citing recent studies, analysts point out that seniors are suffering from increasing card debts with their pensions staying put. With the economic crunch still gripping many Americans by their wallet, older consumers are finding it especially hard to pay off debts or meet their obligations. Worse, rising interest rates and changing terms are making existing balances increase significantly.
Based on recent studies, credit card debts of American seniors over the age of 65 have risen by some 26 percent compared to figures in 2005. This year, older cardholders owe card companies an average of $10,235 each year. Analysts say that the increase is the highest among all age groups included in the survey. Americans nearing the age of retirement are also racking up more debts. Experts say that this can present a problem especially since these cardholders will soon have no more stable sources of income.
The news is causing many analysts to worry about how the different age groups are often perceived when it comes to financial responsibility. Traditionally, older consumers are considered better when handling their finances. With the latest news however, many experts are seeing a reversal of trend, with many seniors now struggling to pay off debts. In the past, older Americans did not use credit cards as often as they do now. Analysts point out that the economic hardship may be forcing many seniors to use plastic for their everyday needs and medical expenses. With medical costs rising dramatically, this has resulted in sudden increases in their credit debts.
Another survey found out that 12.5 percent of American seniors use more than 40 percent of their income to pay off card debts. This figure is higher than all age groups included in the study. Older Americans aged 65 to 74 also posted higher figures, with 11.2 percent using a substantial portion of their income to settle debts.
The problem has gotten so worse than in many cases, cardholders are using their home equities to pay off their balances. The issue of stagnant pensions and benefits are also taking center stage with the rising debts of many seniors. The ongoing debate over socialized health care is also forcing many Americans in their older years to turn to borrowed money for medical expenses. In fact, most senior cardholders have credit debts that average $4,000 or more for medical costs. Americans nearing retirement age are also racking up some $2,000 for their card debts because of medical expenses.