The financial health of older adults in the United States is increasingly under threat as more seniors rely on credit cards to cover basic expenses. According to a new survey by AARP, a significant number of Americans aged 50 and older are carrying high levels of credit card debt, raising concerns about their financial security in retirement.
52% of adults aged 50 to 64 report having credit card debt.
42% of adults aged 65 to 74 are also carrying credit card balances.
47% of those surveyed use credit cards to pay for basic living expenses they otherwise cannot afford.
48% of respondents owe $5,000 or more on their credit cards, with 28% carrying balances exceeding $10,000.
50% of those surveyed attribute their credit card debt to health-care expenses, particularly dental costs.
The cost of basic necessities has soared in recent years. Food prices, rent, utilities, and medical bills have all increased, making it difficult for seniors on fixed incomes to manage their expenses. Many are forced to rely on credit cards to bridge the gap between income and expenses.
Medical bills remain one of the largest financial burdens for older adults. A significant portion of credit card debt among seniors is linked to unexpected health care costs, including dental care, prescriptions, and medical procedures that insurance may not fully cover.
Financial experts emphasize the importance of emergency savings, yet many older Americans have little to no financial cushion. Without savings to cover unexpected costs, they rely on credit cards, leading to accumulating debt and high-interest payments.
Once retired, managing credit card debt becomes even more challenging. Retirees no longer have regular income from employment, making it difficult to pay down balances while covering day-to-day expenses.
According to the 2024 Spending in Retirement survey by the Employee Benefit Research Institute:
More than two-thirds of retirees with debt carry balances on their credit cards.
Credit card debt is the most common type of debt among seniors.
The share of older Americans with debt has risen over decades, with 53% of households aged 75 and older reporting debt in the 2022 Federal Reserve’s Survey of Consumer Finances, compared to just 21% in 1989.
With the economy facing uncertainty, many older adults worry about how they will manage their finances in the coming years.
To improve financial stability and reduce debt, experts recommend several strategies:
Credit card companies set minimum payments to cover interest and a small portion of the principal, but paying only the minimum can keep seniors trapped in debt for years. Experts recommend:
Allocating at least 5% of monthly gross income to credit card payments.
Doubling the minimum payment initially and maintaining that dollar amount over time.
Avoiding new credit card charges while paying down the balance.
Older adults should focus on paying off credit card debt strategically:
High-Interest First Approach: Pay off the card with the highest interest rate first to save on interest over time.
Small Balance First Approach: Pay off the smallest balance first for a quick psychological win, then move on to the next.
Many banks offer credit cards with 0% APR introductory periods lasting 15 to 21 months. Transferring high-interest balances to these cards can help reduce interest payments, allowing seniors to pay down debt faster. However, it’s important to clear the balance before the promotional period ends to avoid high interest rates.
Seniors struggling with high-interest rates should contact their credit card issuers to negotiate lower rates. Many banks may agree to reduce rates, especially for long-term customers with good payment histories.
Nonprofit credit counseling agencies can provide assistance in managing debt. These organizations offer:
Personalized debt management plans.
Budgeting advice to reduce reliance on credit cards.
Negotiation assistance with credit card companies.
