Proportion of over-55s in credit card debt jumps to 54%

The proportion of over-55s who have been in debt in the last five years and have borrowed using credit cards has jumped from 37% in 2018, to 54% in 2019, according to new research from more2life.

The latest figures from the equity release lender suggest this increase has been highlighted further by the 23% of the age group using their bank overdraft to help boost or manage their daily income.

The research has also revealed that after mortgages, credit cards are the borrowing vehicle of choice for over-55s, with a fifth of the age group in the UK turning to credit card borrowing to help fund their lives.

CEO at more2life, Dave Harris, commented: “As older generations enter retirement with lower pension pots, but arguably more financial responsibilities than their predecessors, it is perhaps unsurprising to see that many are turning towards borrowing to help fund their later lives. Whilst credit cards have become a normal part of many people’s financial management and some will be comfortable servicing this debt, this is not true for everyone.”

more2life suggests that reliance on debt is increasing. After credit card borrowing, other common forms of lending include car finance, with 9% of over-55s turning to this option, and 7% of the over-55 age group using personal loans to boost their daily income.

Over-55s are also more likely to be holding student loan debt after choosing to return to university than from a payday loan.

Harris continued: “If you are unable to pay your bills and borrowing on credit to keep afloat then it is vital that you consider all your financial options, as it is only likely to get worse. Currently, around one in five of our customers use equity release to repay debt, so we know that these products and other later life lending options can help people facing these types of issues.”

In addition to increased credit card usage, the proportion of over-55s who have left their bills unpaid has doubled in twelve months – from 8% in 2018, to 16% in 2019. Almost a third of the age group have even admitted themselves that covering day to day expenses is the main reason they have accumulated debt.

Harris added: “With homeowners releasing £1.85bn of housing wealth in the first half of 2019, it’s clear that more and more homeowners are realising the benefits of unlocking the wealth tied up in their homes to help fund their retirement. Ultimately, with an abundance of later life lending options available, it is vital that not only do customers realise that they have options, but that speaking to a specialist financial adviser can help them in the long term.”

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