Home > Managing Debt > Boomers Going Bust With Massive Credit Card Debt

Comments 0 Comments

The recent recession may have led to significant financial problems for millions of Americans, but those most affected by the problems might have been people who were within several years of their retirement. Many of these people were forced to rely on credit cards to make ends meet, but now have massive debt as a result.

The average person over the age of 50 with a middling income who has owed money to credit card lenders for three months or more now carries a debt of $8,278, according to new data from the research and policy center Demos. Meanwhile, those under the age of 50 who otherwise fall into the same categories carry balances averaging just $6,258.

A large reason for this seems to be the hard times on which millions of older workers may have slipped during the financial downturn, when unemployment skyrocketed, the report said. Many people over the age of 50 were forced to use their accounts to cover basic everyday expenses, but were not able to fully pay back their lenders for the full value of the debts they added to their accounts at any point since. For instance, half of those in the older demographic said they carry medical expenses on their credit cards, including prescription drugs and dental care. Further, another 49 percent said they also used their cards to cover auto repairs, while 38 percent said the same of home repairs.

Most troubling, though, is that 34 percent of those over the age of 50 use the cards for the most basic expenses in their lives, such as mortgage payments, groceries, utilities and insurance, the report said. This is often because they don’t have enough cash on hand to cover these costs otherwise.

In all, about one quarter of those polled over the age of 50 said they have these larger amounts of credit card debt as a result of job loss, and 15 percent noted that this concern was the biggest contributor to their debt issues, the report said. Further, 18 percent of those between 50 and 64 said they’ve drawn on retirement savings to cover their credit card payments.

[Credit Cards: Research and compare credit cards at Credit.com.]

Credit card debt can be especially problematic for borrowers who have high interest rates, as their balances can grow significantly in relatively short periods of time if only the minimum contributions are being made every month.

Image: Abdulsalam Haykal, via Flickr

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other sponsored content on Credit.com are Partners with Credit.com. Credit.com receives compensation if our users apply for and ultimately sign up for any financial products or cards offered.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team