Seniors in More Credit Card Debt… What is the Solution?
Recent studies have revealed that the number of older Americans struggling with credit card debt has increased when compared to the young people. In a research findings provided by the AARP Policy Institute and Demos entitled “In the Red: Older Americans and Credit Card Debt,” it was discovered that older American and specifically those over 50 years are in more credit card debt than their counterparts under-50 years.
The old age is such a crucial period in life when the aged persons should be managing their finances very carefully. This is age when the working group retires to enjoy the remaining part of their life. However, this retirement period can be faced with problems especially if the aged persons are struggling with debt.
According to the report, it shows a complete reversal of the state of credit card debts about four years ago when it was the opposite. The main question is why seniors are finding themselves in such high levels of debt than the young people. Although there are factors that may contribute to this phenomenon, it seems that seniors are carrying a burden that may not be theirs.
Some are using the cards to support their adult children who should actually be supporting themselves financially and not relying on their parents. Loss of employment is one contributing factor as a quarter of these seniors are reported to be losing their jobs. What this means is that they are now using their retirements savings to pay for credit card balances something that may make things worse.
About 25 percent of the seniors are assisting their family members to settle their debts including paying for tuition fees for adult children. In the study, it was found out that more than 5 percent of student loans borrowed were granted to persons over the age of sixty. These are not students but they are actually borrowing to support their adult children.
Students should take the burden of their loans so that they can repay when employed after completing their college studies. When these expenditures are coupled with other expenses like medical, home repairs, car repair, rent, utilities, mortgages and insurance, the senior is left in a very difficult financial situation.
These are some of the reasons why the debts are high with a good number of the seniors now dipping into their retirement kit to repay credit card bills and balances. The worrying thing is that if the seniors place themselves in debts, this could dangerously harm their financial security including their retirement funds.
The old age comes with a lot of problems because this is an age when the health of a person deteriorates because the body does not have vibrant immune system. Many chronic diseases crop up during this old age. This means that their financial resources should be used wisely in order to prevent cases of financial bottlenecks and unnecessary borrowing at old age.
People aged 50 and above are carrying a combined credit card balance of about $8,278 on all their credit cards and this is more when compared to the under-50 population, which shows a combined credit card balance of $6,258. There is need for the seniors to be educated in their financial security and how they can maintain it. Many seniors are dying with less than $10,000 in their bank accounts.
One potential way to save would be to look at a zero percent credit card offer, getting a lower APR may help reduce your annual interest expenses, saving you hundreds of dollars per year.