Millions of Americans are now in a better position to deal with their debts than they were just a few years ago, but one demographic may still be struggling more than others.
Low- and middle-income consumers aged 50 and up are now carrying far more credit card debt than younger people, with an average household debt load totaling $8,278 at the end of 2012, according to a new survey by the AARP’s Public Policy Institute and Demos. That’s compared with debts of just $6,258 for consumers under the age of 50. However, other unsettling trends for consumers who are now rapidly approaching their retirement age were also revealed by the study.
For instance, about one-third of households headed by people 50 and up used their credit cards to pay for everyday living expenses including groceries, utilities and even mortgage payments, the report said. More concerning may be that about half of them also carry medical expenses, such as prescription drugs and dental bills, on their credit card balances as well.
To be fair to these consumers, though, it’s important to note that about one-quarter of those in the older demographic said their reliance on credit card debt came as a result of job loss in the last three years, the report said. Often, these decisions were also accompanied by other risky financial decisions brought on by hardships; as another 18 percent said they also dipped into their retirement savings to pay down their outstanding credit card bills.
Further, Americans in this older demographic were more than twice as willing as their younger counterparts to take on credit card debt in an effort to assist struggling family members, the report said. In all, 23 percent of those over 50 said they would do so, compared with just 11 percent of those younger than that.
These findings constitute a significant reversal from a similar study conducted in 2008, which showed older borrowers to generally be more conservative with their money, the report said. However, it should be noted that many of these issues were brought on by hardship rather than an abandonment of previously-held financial principles.
[Free Resource: Check your credit score and report card for free with Credit.com]
Many Americans may have changed their borrowing habits if they could afford to do so in the wake of the recent recession, but still debt remains high for many. The improving economy may help to alleviate these issues going forward, however.
Image: Steven Depolo, via Flickr