Pensioners’ Credit Card Debt Reaches All-time High

RECENT figures produced by GFK NOP reveal that retirees are in a record amount of credit card debt.

Unlike younger credit card users, pensioners are spending more on their plastic than ever before and are more likely to let their spending accrue interest, too.

In June of this year alone, retired people spent an average of £354 on their credit cards, a spending high which hasn’t been seen since the height of the credit crunch in October 2008.

Lowered incomes, inflation and a slow economic recovery are amongst the suggested explanations for this increase.

GFK NOP financial researcher Davyd Edwards explains that, "the cost of living has rocketed while income from savings and investments has fallen, leaving retirees having to adapt to this shortfall."

The figures

The average amount pensioners are spending on plastic has reached an enormous £1.6 billion every month.

This has jumped up by 20% since the beginning of the year, suggesting that retirees are suddenly in particular financial strife.

"Pensioners are piling more than ever before on the plastic and keeping it there" Davyd Edwards went on to say.

Of course, the survey didn’t have any information on whether retires were using 0% purchase credit cards to spread the cost of their spending or moving high-interest balances to 0% balance transfer credit cards.

Conscientious youth

These new figures of pensioner spending seem more startling still when placed against recent findings on the financial habits of the under 25s, also released by GFK NOP.

Since the darkest days of the economic slump in September 2008, youngsters have wiped an enormous £200 million from their cards.

Their average credit card purchasing habits have also decreased from £242 to £221 per month.

Davyd Edwards concluded, "The young may be starting to realize that credit’s gone and shows no sign of coming back soon."

This interesting juxtaposition shows that perhaps you don’t need to be old to be wise.

Retirement Savings

This increase in pensioner debt adds to the bank of evidence that the elderly are struggling financially.

Earlier this month a study by Aviva showed that the elderly are more frequently dipping into their savings to cover unexpected expenses.

The research showed that 92% of those over 55s have had to deal with unprecedented costs over the last five years.

To deal with these expenses, 45% had to spend significant amounts of their savings, which are so crucial for generating income through interest.

Relying on Spouses

Although all pensioners are evidently facing financial hardships, it looks like elderly women have even more of a raw deal.

Recent studies have shown that a large amount of women are relying entirely on their partner’s for their income after retirement.

A survey by insurance provider Prudential showed that 28% of women over 40 are planning to live off their husband’s pension, despite 35% of these not even knowing the amount their spouse will be entitled to.

It is true that women are provided with a pension plan that is on average £7,400 a year lower than a male pension.

But as only 35% of those questioned by Prudential have a full pension lined up for them, it can be supposed that many women are simply unprepared for retirement.

Another study by Baring Asset Management showed that 47% of UK females have no pension savings.

It is actually predicted that this is only the beginning of the financial troubles for the elderly, as the VAT increases being introduced early next year will no doubt exacerbate the situation.

All of these factors could mean a tough stretch ahead for retirees and those nearing the end of their working lives.

Source: credit-card-comparison-online.co.uk