Credit card debt rises faster for those 65 and older

By Kathy Chu, USA TODAY
Cash-strapped older Americans are racking up credit card debt faster than other consumers amid dwindling retirement portfolios and rising medical costs, a study shows.

The study, which will be released Tuesday by Demos, a liberal public policy group, shows that low- and middle-income consumers 65 and older carried $10,235 in average card debt last year, up 26% from 2005. Card debt for all borrowers surveyed rose 3% during that time, to $9,827.

Overall, revolving debt — mostly on credit cards — grew during much of 2008, the Federal Reserve says. But as consumers pared spending, outstanding debt also fell. From the fourth quarter of 2008 through the first quarter of 2009, revolving debt slipped 2.3% to $939.6 billion.

Vulnerable consumers are turning to credit cards for necessities, not luxuries, Demo's survey shows. For instance, more than half of households say medical expenses contributed to their credit card debt.

"The frivolous spending idea, that's not what's driving families into crazy debt," says Jose Garcia, a Demos associate director. "The expense that most affects families is the cost of living."

The largest U.S. bank agreed Aug. 3 to pay $33 million to resolve an SEC civil lawsuit accusing it of misleading shareholders by not disclosing it had authorized the payment of up to $5.8 billion of bonuses to Merrill employees. About $3.6 billion was awarded.

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