A recent USA Today article and a survey by Demos show consumers 65 and older carrying an average of over $10,000 in credit card debt, and that’s up 26 per cent from 2005. Rising medical costs on fixed incomes are forcing seniors to rely on plastic to manage expenses. Tanisha Warner is with Money Management International.
“Credit cards really should be used as a tool of convenience and not necessarily an extension of your income. Sometimes it does allow you to float to the next time that you’re going to have some extra cash. But, yes, you should use credit only as an extension of your income, and not as a necessity. So make a list of all your expenses and figure out, you know, what the priorities are. Be sure to make your mortgage payments and rent payments and things that you absolutely need. For older Americans — this is one of the demographics, too, that we recommend — that you pay close attention to your insurance coverage.”
Warner says work with creditors on a new payment plan. And consider a reverse mortgage.
“If you’re living in a home where you have equity in it, that’s money that you can tap right now. and it turns into income, basically. And then you leave the mortgage behind after you pass. Right now, if you tap into your equity, there’s a check that comes every month that’s income, and it basically creates a new mortage loan. Depending on how much money you’re needing, that the amount of mortgage loan that you would leave behind. And then your heirs would either sell the home or take over the mortgage payment.”
According to AARP, a quarter of the million Americans filing for bankruptcy last year were 55 or older. Ed Mayberry, KUHF Houston Public Radio News.