Credit card debt is often correlated with age. Many believe that younger consumers are more likely to carry credit card debt as their incomes are lower and their savings have yet to have been built. However, a new study finds that low income older consumers carry higher balances than their younger counterparts.
A study from AARP reveals that low and middle-income Americans 50 years or older had an average credit card balance of $8,278 in 2012, compared to $6,258 for people younger than 50. There was also a marked difference in how much older and younger generations had paid off. Older consumers had reduced their balances by 16% since 2008 while younger consumers had paid off a whopping 37% of their credit card balances. The data suggests that younger consumers are not only more likely to pay off their balances in full, but also progress toward a goal to pay off their credit cards in their entirety.
Historically, younger Americans carried higher credit card balances. However, as the credit crisis raged on and credit became more difficult to ascertain, it is possible that younger consumers were unable to carry large debt balances in part because credit simply was not available to them. One-third of all people who attended a credit counseling service in 2012 were 50 and older, much higher than the ratio in 2009.
Credit card debt is attributed in part to job loss. Nearly a quarter of respondents said that a job loss had affected their credit card debt while more than a third reported using their credit cards to pay for the most basic of living expenses. Younger consumers are more likely to carry high student loan balances, however, a method of borrowing that was not included in the study.