Subscribe to this BlogGrandparents are drowning in credit card debt
Older nonwealthy Americans are racking up credit card debt at a rate that outpaces other groups.
People age 65 and up carried an average of $10,235 credit card debt in 2008, according to a study released Tuesday by Demos, a public policy research group. That's an increase of 26% since the organization's last survey of low- and middle-income borrowers in 2005. The average debt for all borrowers in the survey rose just 3%, to $9,827, during that same time period.
Rising health care costs may be one reason seniors are turning to plastic, the study shows. More than half of indebted families surveyed cited medical expenses as a major factor that contributed to credit card debt; the average household, in fact, attributed $2,194 of credit card debt to medical expenses. Senior households, however, blamed almost $4,000 of credit card debt on out-of-pocket medical costs. Prescription drugs were the medical expense most often cited.
Another key finding in the survey, aptly titled "Plastic Safety Net," contradicts the notion that credit card debt is strictly a result of frivolous spending. Three out of four households surveyed said they used credit cards to pay for expenses including car and home repairs, job loss, college attendance, loans to relatives and operation of a business. More than a third of households reported relying on credit cards to cover basic living expenses for five of the last 12 months. Households that used credit cards for basic living expenses had a much higher average balance — $13,302 — than those who did not ($7,795).
Results were based on a phone survey between April and August 2008 of 1,205 low- and middle-income households whose incomes fell between 50% and 120% of the local median income. Participating households had to have credit card debt for more than three months at the time of the survey.
I really feel bad for these seniors. I think a lot of them had set up their retirement plans to be able to see out their last years in comfort. Unfortunatly the losses in the market him them the hardest as they don't have any money coming in to offset it.
Its hard to adjust your budget when there's no new source of income.
I just hope our new idea of retirement doesn't include credit card debt as a given.
I wrote a blog about this same thing if anyone wants to check it out at….
http://www.thedebtgazette.com/2009/07/retirementcreditcarddebt/
I'm with you, Chris from Denver. Carrying credit card debt is not intelligent.
I don't think this point has been made yet, so I'll explain something about elementary statistics. This data is based on people who earn below or slightly above the median income in their area and have been carrying credit card debt for three months or longer.
You are polling people who live above their means and opining that because some of the debt was for "household expenses" the notion that "credit card debt is strictly a result of frivolous spending" is contradicted. This is completely bogus. If those people did not have ANY frivolous spending, how much of their household expenses would need to be charged on a credit card?
I agree that the subsidies should end they were another democrat failed attempt to control everything. Farmers are now paid not to grow the corn and spend their time mowing thier lawns and miles of ditches instead. See once the govt. gets involved it screws up the system, so yes let the subsidies end and if the price of a Big Mac goes up well then so be it, then maybe people will quit eating them, then they may start growing a garden again, then the exercise from growing that garden again may make them lose weight and eating what they grow may make them healthy, then they wont need the meds they take for all the bad food they ate that gave them all the conditions they have.
I am not against govt or taxes, I would gladly pay my share for defense of this country, for roads, bridges, schools, courts and police, fire, and anything else that we need run by the government as it is too big to be handled in any other way. But I do not like paying taxes for all the excess and stupid things like a fast food tax.
Just a thought if the government was sooo worried about our welfare as opposed to making as much money as they can from taxes, then why do we still have tobacco and cigerettes…oh yes because it makes them sooo much money. enuff said.
Our Government is driven by special interests that infect just about every aspect of our daily lives. Every pocket is picked clean; all in the name of capitalism run amuck. And it is leading more and more of us into perpetual debt.
Move room ancient Rome; you may have company soon.
SOOOOOOO MANY prescriptions are a WASTE and COUNTER PRODUCTIVE; doctors must get frequent flyer miles from every pill they cram down a geriatric's throat. My father had about 8 meds, and was geting more bizarre – mum cut out 5 of them, and dad was his more normal self. Most of these poor fools seem to believe doctors KNOW something, that they are OMNIPOTENT, when, in reality, they're just as whacked out of reality as many geriatrics on TOO many drugs…..many of which don't provide ANY COMFORT, NOR RELIEF!!!
To all those against government intervention regarding the fast food tax. I ask what about government corn subsidies that keep the price of food so artificially low? One of the reasons why fast food burgers are so cheap is because they feed their cows the excessive amounts of corn that gets produced. The government spends like $5bn a year subsidizing corn and encouraging (paying) farmers to grow it.
So if you're a proponent of small government and wants no or minimal taxes, then you should be against the subsidy. Once that's gone, it would be up to the consumer to pay that $5bn in extra food costs. No tax, but end result is higher food prices.
If you are pro-subsidy because it keeps your grocery bill lower (10 ears of corn for $1 anyone?), then that just says to me you only want government intervention when it's at YOUR convenience. You want government to step in and pay for some of your luxuries but you don't want to pay taxes to cover that cost.
The entire system is a joke. In the end, reality will win. It always does. The things the don't make any sense, even though they keep telling they do, will crash and burn.
And we will all have to get back to what makes sense. That means an economy based on actually building things, people living within thier means (this includes being responsible for your own health care costs) and a government that only does what citizens can not.
The credit card companies will change thier ways when their ways catch up to them. In this case it will be when they realize that a lot of elderly people are totally aware of what they are doing when they run up credit card debt at the end of their life.
Like the joke/attitude that when I die I want to be sliding into home base with a glass of wine in my hand, body used up, bank acount empty and THE CREDIT CARDS MAXED!
to the guy who wants a fat food tax, what is wrong with you? have you not seen the high tax on cigerettes? And yet people still smoke and gee they pay higher premiums as well, and it will be the same with a fat food tax, taxes never solve anything as people just get used to paying them.
An incentive on the other hand does work where is the national health care plan to get people in better shape to exercise, there isnt one because the goverment wants you dependent and taxed heavily and when the government plan goes through you will see companies drop thier health care plan and expect the people to join the government plan. Remember pension plans, the Gov'ment started 401k's and the companies did away with pension plans, first by offering a 1 for 1 match and then eventually cutting that out as well.
to the person that thinks there is a national health care crisis developing, so we should stop giving the poor guy the expensive drugs they need to have a better quality of life, how about your elected officials stop taking money from the drug companies and force them to offer US citizens the same drugs I pay pennies for around the world and they get for free.
People need to wake up and realize the government cannot solve all of our problems by taxing us. Government is suppose to work for us not us work to support a oversized government.
By the way I pay for my own health care plan, it is a worldwide coverage plan and gives me incentives to stay and improve my health. I could save money by joining the gov. plan and let others pay for it but I wont cause I have Pride.
Chris – I agree with the first sentence. However, I eat plenty of fast/junk/bad food… and am in great health because I know I am 23 and am extremely active (Rugby anyone?).
I don't want to pay a tax because other people are fat and irresponsible (debt and food wise). I've been paying (non-summer job) taxes for a year now and all my money has gone to is bailing out other people who were too stupid to realize that credit cards are NOT free money – please don't suggest that I get punished further for other people's mistakes.
I hear everyone talking about credit card debt and how terrible it is. Let me say I have twice as much credit card debt as they site on this article. And I have a high credit rating with significant unused credit. On average I pay about 7% interest. Some is secured debt but most is not. Instead of paying off these credit cards I put my money in IRA's. Except for the last several months I have made 5 or 6% more on those accounts in interest than I have paid on credit card interest. I now have 4 times as much money accumulated in this IRA than CC debt owed. I would invest the money I had in cash and cover expences sometimes with credit cards. This improved my credit rating providing emergency funds while saving. It has worked for me. In 10 to 12 years, with continued good money management, the IRA will be 10 times the its current value. So, improve your credit rating and maintain it and let the banks finance your retirement. Good luck and when looking for investments be pessimistic so you can be optimistic about your IRA.
Well you can always claim bankruptcy if you pay off your medical bills by credit card then if you just make payments to the hospital. The comment on overweight people with higher premiums is wrong. Or they need to change the BMI. I am 5'9" 265 Powerlifter with perfect health. According to BMI I am morbidly obease. I can't get medical insurance because of that "high tech" spin dial. For those who question my Cholesterol is 165
BP is 115/75
The credit card industry should be hit with a class action suit, for freely giving out credit cards to those not credit worthy. No wonder our charges are so high and businesses are beginning to refuse credit cards due to the high usage fees assessed the businesses. Greed
I listen to Dave Ramsey. It'd be amazing if all americans cut up thier credit cards and carried $0 in credit debt. Not only that debit cards have 0% APR for life!
Even at $10,000 revolving balance at 12% APR, that's $100 a month in interest for the privlige of living in debt. How dumb is that…
Just like their children, seniors have learned to live above their means…yes, I know that some or even most might be out of necessity.
How horrible it is going to be when people in this country learn that you have to live within your means. Elders might have to move in with children or the other way around. We might have to care for our aging parents ourselves instead of paying for outside care.
Oh my, we might even not be able to buy that fancy new car, our kids will have to do without the latest video game and endure the cruel treatment of reading library books or going outside to run and play.
What will we do when we can't mount debt upon debt and live for year after year beyond our means and on borrowed money….oh my, the world might come to an end..
Wake up!! You may soon be living through what either your parents or grandparents called the 'Great Depression'. You better learn that what the Jones have might be taken away real fast (as has been demonstrated over the last several months).
Oh, and there are those that might say: 'Our government will take care of us'. If you study history you will find that almost nothing the government did helped, it was not until the begining of WWII when other countries started buying our goods to help fight a war did this country come out of the depression.
MC in Austin: That is exactly why a government run healthcare system is not a solution. Yes, these people have medicare and they still cannot afford healthcare costs. Why would anyone think an overall public option would be any different?
The second sentence of this article mis-characterizes the report referenced. It should read "*Low and middle-income households* age 65 and up *who carry credit card balances* carried an average of $10,235", which is quite a different point, though far less dramatic I suppose. Close reading of the 3rd sentence clarifies things but somewhat imperfectly, IMHO.
Another reason why we need to start eating a healthy diet in this country and getting a lot more excercise regularly. I am in favor for the fat foods taxes across the board with higher premiums for the overweight individual.
Still amazes me that people can argue there is not a health care crisis developing. The fact that this group generally has health insurance and they are still having such difficulty says something.
One thing this may indicate too is a need for more case management for the patients as well as better training for the doctors and nurses. Realistically if a patient is taking medication that is bankrupting them and making minimal difference to their quality of life one has to ask whether they are being given the right advice by their providers. This situation occurs all too often.
I have been using a credit card to pay for groceries ever since most grocery stores in Texas began accepting credit cards – which was when the state government created its debit card system to replace the "food stamp coupons".
My father has been using a credit card too to pay for groceries. We both pay our bills in full each month, so there are no interest or late charges inflating the true cost to us.
Occasionally I will pay cash, simply because I won't charge less than $20.00 – I don't want to see trivial amounts on my credit card statement.
My father, however, insists it is safer for him to use the credit card because back in the old days – the 1950s for him – it wasn't safe carrying a lot of cash around, there were people who would rob others for the money. He feels safer not showing cash at the checkout.
While my statement shows a balance during the month, new purchases accumulate, since the previous month is completely paid off, I'm not concerned about the inane and obtuse contracts the credit card companies keep throwing out.
But when I read this sentence:
=begin=
The average debt for all borrowers in the survey rose just 3%, to $9,827, during that same time period.
=end=
I am puzzled, because my "debt" that has yet to be shown on a statement can rise to big numbers sometimes. But my real debt is zero, and I can quit using the credit card most of the time and pay by check or cash, this shrinking the "balance" further.
That tells me the real "average debt" held by people in dire financial straits is horrendously high, higher than that $13,302 in the story.
But start another article about how much of that "revolving credit" is actually principle and how much is onerous interest charges and fees.
If people are drowning in debt, it's because their cash is being vacuumed out of them by the interest charges and fees, not the original costs.
Hmmm … there is a distinct possibility that the card holders won't be able to pay off their balances after expiration … not the card's …
This is another reason for politicians like Claire McCaskill to support rather than malign the FHA Reverse Mortgage Program. If they sat across the kitchen table and learned this and more about the dire financial situation seniors are in they would be shocked!
Credit Card debt is the worst kind, Seniors! Use credit unions, and secured loans, only borrowing out of dire necessity. Otherwise, take the lesson that all Americans must learn: Live within your means. But you will have more "means" without paying usurious rates charged by credit card issuers.