SENIORS LEANING ON CREDIT
August 31, 2009
Average credit card debt among low- and middle-income Americans 65 and older reached $10,235, up 26 percent from 2005, according to a recently released study by the public policy group Demos. It was the fastest increase of any age group, says Nancy Trejos of the Washington Post.
It's a surprising reversal of fortune for a generation that had been considered more financially responsible than younger generations. In 2007, the most recent figure available:
- The percentage of 55-to-64 year olds who had to use more than 40 percent of their income to pay down debt was 12.5 percent, higher than any other age group.
- Seniors age 65 to 74 did not trail far behind, with 11.2 percent contributing that big a chunk of their income toward paying down debt.
- On average, $4,000 of a senior citizen's card debt had covered medical expenses, such as prescription drugs, dental expenses and doctor visits.
Complicating matters, many card companies have raised interest rates, fees and minimum payments recently in anticipation of a new law taking effect in February that will restrict such hikes.
Financial advisors recommend that older Americans call their creditors and ask for better terms. Those who are having trouble making payments should seek help from a credit-counseling agency.
Those with medical debt can reduce their costs by switching to generic drugs. If they are having trouble coming up with cash to cover health care, they should see whether they qualify for Medicaid or shop around for policies to supplement Medicare, said Pam Villarreal, a senior policy analyst for the National Center for Policy Analysis.
Sources: Nancy Trejos, "Seniors Leaning on Credit," Washington Post, August 30, 2009; Tamara Draut Jose Garcia, "The Plastic Safety Net," July 28, 2009.
For WP text:
For Demos study:
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