COLUMBUS, Ohio-Older Americans today are carrying more credit card debt, as will individuals who head toward retirement 30 years from now.
A recent study by The Ohio State University shows younger adults today are taking on more credit card debt than their Baby Boomer counterparts did when they were young, a sign that many Americans will continue to borrow to retirement, the study said. Also, a recent report by the Credit Abuse Resistance Education (CARE) program indicates that due to the economic crisis, older, unemployed Americans are borrowing money to go back to school to obtain training for new careers (see related coverage, Feb. 4).
The report, authored by OSU Professor of Economics Lucia Dunn, suggests that a person born between 1980 and 1984 has credit card debt substantially higher than debt held by the previous two generations: on average $5,689 higher than his or her parents (people born 1950-1954) at the same stage of life and $8,156 higher than his or her grandparents (people born 1920 to 1924).
Slower Payoff
The OSU report revealed, too, that young adults are paying off credit card debt at a slower rate, another sign they will carry debt longer. The study projected that younger generations may continue to add credit card debt into their 70s, and die still owing money on their cards. OSU stated that this an opportunity for FIs to educate Generations X and Y about wise use of money and their credit cards.
CARE also stated that overall borrowing is up across all consumer segments, pointing to Fed data that shows total consumer borrowing increased $16 billion in November. While credit card debt rose $817 million, the Fed figures showed this was a 16.5% decrease from the prior month, CARE reported.
Though consumers have continued to pare back on credit card debt as the economy slowly recovers, student and auto loans increased by $15.2 billion in November according to the latest Fed report.
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