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Nearly half of older Americans are reliant on using credit cards to cover basic living expenses they don’t have the cash for. And nearly 20% of this cohort consistently relied on this type of high-interest debt on a monthly basis over the past year, according to survey results released this week by AARP.
These basic expenses include food, housing and utilities, as well as health care expenses and other unexpected financial burdens. The rising costs associated with such necessities “are threatening financial well-being and retirement security for many older Americans,” the organization said.
“The survey found that 37% of older adults with credit card debt report that they have more credit card debt than a year ago,” AARP reported. “Nearly half (48%) of older adults who carry a credit card balance from month-to-month owe $5,000 or more, and 28% carry a balance of $10,000 or more.
“Almost 9 in 10 respondents (87%) say that unexpected expenses contribute to their credit card debt.”
Indira Venkat, AARP’s senior vice president of research, added that the reliance on credit card debt is a destabilizing factor in the finances of those living on a fixed income.
“A concerning number of older adults carry credit card debt today just to make ends meet,” Venkat said. “Credit card debt can jeopardize retirement security. For many retirees, who often live on a fixed income, it’s a real challenge to pay down debt without significant trade-offs.”
Those between the ages of 50 and 64 are more likely to carry credit card balances, as well as those with incomes of $40,000 a year or less. About half (52%) of survey respondents between the ages of 50 and 64 have credit card debt, but more than one-third of those in the 65-to-74 and 75-and-older brackets also carry balances.
“Among those who are worried about their credit card debt, 43% are very worried about how long it will take to pay off their debt,” the survey found. “Roughly 1 in 5 expect to take more than five years to pay it off. The top drivers of credit card debt include everyday expenses, vehicle costs, housing costs, and health care.”
Half of respondents labeled health care costs as key culprits behind their credit card debt, with dental expenses (46%) leading the charge alongside prescription drugs (35%) and vision care (19%).
Nearly one quarter of respondents (23%) said they are still paying off balances from canceled credit cards. And 46% said that paying down credit card debt has hurt their capacity to save for the future.
The survey sampled 4,846 people 50 and older who “carry over credit card debt from a previous month, whether on active cards or cancelled cards,” AARP explained.
