Over 55s credit card debt up by a fifth
The proportion of over-55s who have been in debt in the past five years and have borrowed using credit cards has increased from 37 per cent in 2018 to 54 per cent in 2019, according to More2Life.
The equity release lender found that more than half of over-55s who are in debt have borrowed using credit cards, and nearly a third of this age group borrow to cover day-to-day expenses.
The research found that after mortgages, credit cards are the borrowing vehicle of choice for the over-55s, with a fifth (22 per cent) of over-55s in the UK turning to credit card borrowing to help fund their lives.
After credit card borrowing, other common forms of lending include car finance (9 per cent), personal loans (7 per cent) and overdrafts (7 per cent). Interestingly, over-55s were more likely to be holding student loan debt after choosing to return to university than from a payday loan.
More2Life also found that the proportion of over-55s who have left their bills unpaid has doubled in the past 12 months from 8 per cent in 2018 to 16 per cent in 2019. The lender described this as a “cause for concern”, as is the fact that 29 per cent of this age group admit that covering day-to-day expenses is the main reason they have accumulated debt.
A further 26 per cent said they have used credit cards to help pay for other outstanding debt, and one in five said they have borrowed to help pay their mortgage debts. A quarter (24 per cent) have held debt to pay for a large purchase, such as a holiday or car.
Dave Harris, CEO at more2life, said: “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.
“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.”