The golden years of today’s young adults might be plastic.
“If what we found continues to hold true, we may have more elderly people with substantial financial problems in the future,” aid Lucia Dunn, an Ohio State University professor of economics, who has been studying some of the demographics related to borrowing. “Our projections are that the typical credit card debt holder among younger Americans who keeps a balance will die still in debt to credit card companies.”
In a national study, she and other OSU researchers found that people born between 1980 and 1984 have credit card debt substantially higher than their parents or grandparents. The report found on average, today’s 20 and 30-somethings have about $5,689 more in credit card debt than their parents did at this stage of life and $8,156 more than their grandparents.
The study looked at not only the borrowing behavior of people over a 13-year period of time, but also they’re payment history. In all, about 32,542 cases were reviewed.
Credit card debt does have a lifecycle correlation, meaning it is higher when we are younger, peaks in middle age and then falls in our senior years. But Dunn said what’s troubling is the younger generation is amassing more debt and is slower to pay it off than their parents and grandparents.
But Dunn said research also shows that raising minimum payment requirements to include more than just interest, encourages borrowers to pay down their balances faster.
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