Bailout

What?s with older Americans and credit card debt?

By Felix Salmon

Lending Club just commissioned a new debt survey from Harris, which has some interesting results:

Most Americans have some debt (76 percent). Among those who have debt other than a home mortgage, adults 55 and older are more likely to have credit card debt (73 percent) than younger adults 18-34 (60 percent)…

Of those who have debt, younger adults are more likely to have debt other than a home mortgage, with 93 percent of adults ages 18-34 reporting debt other than a home mortgage compared to 83 percent of adults ages 55 and above.

Older adults, however, are more likely to carry credit card debt, with 73 percent of those 55 and older who have debt besides a home mortgage reporting they have credit card debt, compared to 60 percent of their 18-34 year old counterparts.

I’m not entirely sure what this means, but it seems to imply that the young are more financially sensible than the old. It makes sense that 93% of 18-34 year-olds have some kind of non-mortgage debt, given the need for student loans and car loans. But only 60% run a balance on their credit cards, compared to 73% of Americans aged over 55.

Why are older Americans disproportionately likely to be racking up credit-card debt? I can see why Lending Club commissioned this survey: it’s pretty much a no-brainer for these people to refinance their credit card balance with a plain-vanilla unsecured loan, but precious few of them seem to do so. And I daresay that if you looked closer, a lot of them could even pay off their credit card debt with savings, and aren’t doing so.

Or is there something I’m missing, here? Is there any good reason why a whopping 73% of older Americans should be running credit-card balances?

Full post as published by Macroprudential on June 24, 2010 (boomark / email).