Nearly half of Americans aged 50 and older with credit card debt are using credit cards to cover basic living expenses, with debt balances on the rise, according to a new survey by AARP.
AARP found that 47% of adults aged 50 and up who carry credit card debt are using their credit cards to pay for basic living expenses like food, housing, utilities, health care and unexpected financial needs. Among those with credit card balances, 17% used credit cards every month in the last year for those expenses.
Of the older Americans with credit card debt, 37% said they have more credit card debt than they did a year ago. Nearly half, or 48%, said they carry a month-to-month credit card balance of $5,000 or more – while 28% have a balance of at least $10,000.
“If you look at the 50 to 64 year olds, the group that is potentially on the runway ramp to retirement, this is the group that is particularly feeling the impact of credit card debt,” AARP senior VP of research Indira Venkat told FOX Business in an interview.
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“What’s concerning there is they have proximity and line of sight to a possible retirement,” Venkat explained. “They’ll have to make tough choices – choices between paying down credit card debt or saving for retirement and ensuring their retirement security. But that doesn’t in any way mitigate the older adults and those who have retired, and a lot of them on fixed income, it does pose very dire challenges for them on paying off their credit card debt.”
The AARP survey found that among adults over 50 with credit card debt, 26% are very worried about how long it will take to pay off their debt, with about one-in-five anticipating that it will take more than five years.
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The top drivers of credit card debt included everyday expenses like food, housing, utilities, vehicle costs and healthcare. Half of respondents in the over 50 cohort with credit card debt said healthcare expenses have contributed to their debt. Among that group, the biggest expense categories were dental expenses (46%), prescription drugs (35%) and vision care (19%).
Venkat said that there “are many older adults for whom there is no choice” when it comes to putting expenses on credit cards. “If it’s a matter of putting food on the table, they really have a limited number of options for that.”
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Nearly half, or 46%, of respondents with adults 50 and up with credit card debt said the debt has hurt their ability to save for the future.
“That said, what I think is happening, especially for those who are on the runway to retirement, is they are making tough choices,” she explained. “Do they bring down credit card debt or put away money towards retirement security? And those decisions that they are making based on the level of knowledge that they have, where there is an urgency for payment of debt, particularly in light of the higher interest card expenses they are incurring.”
“At AARP, what we are doing is to make sure that they are informed, that they have access to different approaches that they can use to address credit card debt,” she said of AARP’s personal finance resources, which she added are accessible to the general public, including non-AARP members.
Those resources include tools like financial calculators, including one focused on paying off credit card debt, along with providing tips like what questions to ask a financial advisor, strategies for paying off debt.
“It’s so much a function of who you are and your personal circumstances, but the important thing that we keep reiterating is to start now, start today. Be intentional with a plan on how you’re going to bring down and address the debt. And don’t get discouraged, you know, if there’s a little bit of a setback, we all have that. But the more important thing is to stay on track and keep moving forward,” she said.
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