Study Shows How Debt and Spending Varies with Age
By Grace Austin
The number of credit cards, debt and average amount consumers can spend depends greatly on age, according to a new study.
The study shows that not only is credit a multi-generation experience, but that reliance on credit cards only grows with age. One-thousand people were interviewed for the study; they all had at least one credit card.
Nationwide, credit card debt averages to about $6,000 per person. But it’s been growing. Millennials still ranked lower than Gen Xers and Baby Boomers, with around $5,500 in debt, compared to $6,600 for Gen Xers and $6,800 for Baby Boomers.
Number of Cards
Baby Boomers and Gen Xers both as generations have an average of four cards each, while millennials average three cards total. Across all age groups, 10% of survey respondents said they had a whopping six or more credit cards. Analysis shows that having multiple credit cards does have some benefits, helping to increase your credit score with a regular payment record.
The average limit for credit cards was $9,500. Baby boomers have the highest median credit limit, at $11,000 with Gen Xers just a little above. Credit card limits often increase with time, income and continued spending, so a higher limit among older generations follows that.
Millennials also had lower debt than the older generations, with a little over half holding some amount of credit card debt. Gen Xers had the most, with more than two-thirds of the generation owing money on credit cards, and Baby Boomers just a little below Gen Xers. Sixty percent of people overall have credit card debt.
It makes sense that Gen Xers would have both the most credit card debt and the highest limits — they’re people at middle age — where they may still be paying off other debt from school, but have families, homes and various other expenses that come with those responsibilities.
Credit Card Dependency
Nearly 1 in 5 survey respondents actually depended on their credit cards to pay for basic living expenses. That means if their card limit is reached or there’s an unexpected expense, they could be relying on alternative financial means like payday loans and title loans.
More than half of respondents said they’d even maxed out their credit cards. Baby Boomers had interestingly enough done this the least, with those from Generation X doing this the most.
Sixty-six percent of credit cardholders carried over a monthly balance, which is something that wouldn’t occur by sticking to cash.
And despite the relatively large amount of debt held already, about a quarter of people said they want to open up a new credit card this year. Millennials responded yes the most.
Credit Card Concerns
Surveyed people did have major concerns with credit cards. Sixty-seven percent of respondents said they were most concerned with high interest rates, and another 65% were concerned about the risk of falling into debt. If anything, basic financial literacy could be beneficial in reducing overall debt, and that starts with understanding the basic tenets of credit, such as APR.