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."

Demos' phone survey, conducted April through August 2008, polled 1,205 low- and middle-income households, defined as those with 50% to 120% of local median income. The margin of error is plus or minus 3.7 percentage points.

The data are in line with other industry research showing that seniors are becoming the face of the indebted.

From 1992 through 2007, the latest data available, older Americans' credit card debt grew faster than the overall population, according to the Employee Benefit Research Institute, a non-partisan group that studies economic security.

"You see a great increase in credit card debt for people right near retirement age," says Craig Copeland, a senior research associate at EBRI. "They're probably still working, but they're also the most likely to become disabled," which could force them to rely on credit cards.

Demos' survey found that those carrying credit card debt are also paying more for it: Close to one in four households now pay more than 20% interest. And households charged late fees paid an average of four fees during a 12-month period.

These high rates and fees can upend consumers' budgets, advocates say. "When your interest rate goes up, it's another hammer blow to your ability to make ends meet," says Sally Hurme of AARP, the group for consumers 50 and older.

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ALEX FERGUSON BLASTS CITY

SIR ALEX FERGUSON has launched a savage attack on Manchester City over their controversial billboard of Carlos Tevez.

The United boss branded City arrogant and showed contempt for Tevez, who has been heralded with a huge poster on a main road in the centre of Manchester.

Fergie also claimed City new boy Emmanuel Adebayor called United to try and engineer a move to Old Trafford instead. But the former Arsenal striker was turned down flat.

Ferguson said: "The billboard is City, isn't it? They are a small club with a small mentality.

"All they can talk about is Manchester United, that's all they've ever done and they can't get away from it. That's stupid. That arrogance will be rewarded in the right way. It's a go at us, that's the one thing it is. I don't look upon City as my biggest challenge.

"They think taking Tevez away from Manchester United is a triumph. It is poor stuff. I thought he would go to City a long time ago. Now I don't have to deal with certain players who are miserable because they are not playing. I have good professionals here.

"What's Mark Hughes got, 10 strikers? So if he picks a squad to go to Chelsea he has to leave seven behind, or five at least. He has to deal with that. It will not be easy."

Fergie also revealed striker Adebayor - desperate to sign for a club playing Champions League football - called United and Chelsea in the hope they would hijack his move to Eastlands from Arsenal.

The United chief added: "At the last minute, from what I can gather, I know Adebayor or his agent phoned us after he had agreed a deal with City and then did the same to Chelsea.

"You ask why he is going to Manchester City and it can only be for one reason. He was desperate to get to Chelsea and he was desperate to get to us.


"I am not saying they are different to any other player but when someone offers you more money, that is a big attraction. That is the reason those players have gone there. I can't say I'm enthusiastic about the season because of everything that has gone on but there is an edge being put on us because of all the buying City have done.

"Do you know what City's biggest triumph is? It's getting those players there. I don't know if they will do anything. It's not easy to get in that top four so the biggest success is just to get the players there. They might not get beyond that.

"The top four has been established a long time. Liverpool or Chelsea won't die. City's spending is only demoralising if you panic.

"The one who has the challenge is Arsene. I know he doesn't have the money and how he uses that £25m will be very interesting. The test might not come from City. Tottenham, Aston Villa and Everton will all have a say."