What’s with older Americans and credit card debt?

By Felix Salmon
June 24, 2010

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Lending Club just commissioned a new debt survey from Harris, which has some interesting results: (Update: See below, maybe they’re not interesting after all, and they’re just the result of a badly-worded survey).

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. (Update: See the second update below, this isn’t really true either. Lesson: don’t trust press releases regarding survey results!)

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?

Update: Many thanks to Beer_numbers, in the comments, who suspected that there might be something fishy going on in the survey: what if it captured people who had credit cards, but not credit card debt? If you pay off your credit card in full every month, you use your card as a transactional payments device, you never pay interest, and it doesn’t make much sense to say that you have credit card debt. Certainly you can’t save any money by refinancing that debt into something with a lower interest rate.

So, what exactly did the survey ask? It was a multiple-choice question:

Which of the following types of debt (aside from a home mortgage), if any, do you currently have? Please select all that apply.

The options were Credit card(s); Auto loan(s); Student loan(s); Health/medical; Major purchases (eg home appliances, entertainment systems); Other; and “I do not have any other debt besides a home mortgage”. If you have a credit card which you pay off every month, how are you meant to answer that question? Do you have a credit card? Yes. So it’s easy to imagine that you’d say yes to the do-you-have-a-credit-card question, even if you don’t, in reality, have credit card debt.

This was, to me, an atrociously badly-worded question. And as such, I think it’s probably best to discount the whole survey, and conclude very little from it. Shame on Lending Club and Harris.

Update 2: I just got this statement from Rob Garcia of Lending Club:

Beer_numbers is correct in pointing out that the numbers seem high. While the numbers do sound high, unfortunately for America, they are accurate and are consistent with other surveys in the market.

The exact question we asked was:
“Which of the following types of debt (aside from a home mortgage), if any, do you currently have? Please select all that apply.”

We do believe that the 44% of consumers who selected “credit card debt” as one of the answers to this question are indicating debt that they are carrying month to month. If they were simply indicating that whether they had used credit cards as a payment method then the number would have been much higher.

Where did the 44% number come from, since it’s not anywhere to be seen in the official press release? It turns out that if you look closely, the survey doesn’t say that 73% of older Americans have credit card debt; it says that 73% of older Americans who have debt other than a home mortgage have credit card debt. Chalk that one up to a badly-worded press release.

The actual numbers: of 2,401 respondents, 1,831 had debt; and of them, 1,068 had credit-card debt. For Americans 55 and older, there were 804 respondents, of whom 537 had debt, and 329 had credit-card debt. That’s 41% of the total. For Americans between 18 and 34, there were 719 respondents, of whom 553 had debt (that’s 77%, not 93%), and of whom 307 had credit card debt. That’s 38% of the total. The difference between 38% and 41%, I think, is not particularly significant.

Or maybe I have my denominator wrong, I can’t work out whether I’m meant to use the “weighted base” or the “unweighted base”. Here’s a PDF of the results, have at it. Where’s Nate Silver when you need him?


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they’re on fixed incomes, and have significant variable costs from illnesses.

Posted by awgupta | Report as abusive

As someone who only uses credit cards for transactional purposes, I always have at least some credit card debt outstanding simply due to the timing of charges relative to the last statement date.

The numbers seem too high to be “percentage of adults who carry credit card balances from month to month and pay interest on those balances”. If it’s just the non-interest bearing current charges, then I think it’s a meaningless stat.

Posted by Beer_numbers | Report as abusive

Beer_numbers, good point. I’m checking now.

Posted by FelixSalmon | Report as abusive

Credit card interest was deductible when older Americans were younger, until the 1986 tax reform. I bet it’s a habit they got during the days of deductibility, and never unlearned it.

Posted by Olema | Report as abusive

It took me until 55 to figure out that I was going to die. Credit looked different then.

Posted by carpingdemon | Report as abusive

Agree with Beer that this number should be lower.

But being 55 year olds were in there… this age group is the baby boomer crowd who, having watched their mom’s save the wax paper lining of cereal boxes, were never quite as good as saving.

And this age group where kid’s leave the nest, the motorcycle or sports car or new toy becomes a necessity. The bucket list comes out. Renovations are suddenly in order and then they call home to say they can’t find a job, so could you

My tongue is NOT firmly planted in cheek when I say… the kids at college are using your credit cards.

i really want to know how much debt they are carrying and for how long. I know some young people who have 25k debt and barely make interest. I think that might have been more important then repeating same iffy stats in paragraph one and three.

Here is a more interesting question, which of the 20% owe CC debt of $20,000 or more?

Posted by hsvkitty | Report as abusive

oh Carpingdemon, that was perfect…

Posted by hsvkitty | Report as abusive

Also agree with beer#s. The press release didn’t specify what was meant by “carry credit card debt.” We know that historically the percentage of convenience users who do not roll balances and pay interest runs 30-40%. I think it is likely that older cardholders are more likely to have higher income and assets than younger borrowers, and more likely to be convenience users.

Posted by 77SunsetStrip | Report as abusive