A study conducted by Demos, a research group, has revealed some startling facts about credit card debts in the U.S. With the average credit card debt at more than $4,000 by the time many Americans get out of college, the research is poised to develop renewed interest in card debts.
According to researcher seniors are racking up more debts than other age groups. In 2008, Americans aged 65 and above owed $10,235, on average, based on their credit purchases. The figure is much higher than the research group's previous findings in 2005. In fact, it is a full 26 percent higher.
Other age groups fared better than seniors, with debts rising some three percent to $9,827 for the same period.
Experts say that the sudden spike in credit debts can be attributed to the rising health care costs. With medication and other health products becoming increasingly expensive, seniors are turning to plastic for help. The same study also found out that more than half of American households surveyed pointed to medical expenses for their credit debts.
In fact, the average family charges some $2,194 to their credit cards every year for health care expenses. For most seniors with plastic, however, the amount is much higher at almost $4,000. Prescription drugs are often the most cited expenses by the seniors.
The Demos survey also contradicted the common notion that high credit card debts are the result of lavish spending. In reality, researchers say, three out of four families admit using plastic to pay for essential expenses like home and auto repairs, college tuitions, and business operations costs.
A third of the households who participated in the survey also admitted to relying on credit cards to pay for basic living costs. Researchers added that the same respondents lived off their credit cards for the last five of twelve months. The study also revealed that families who used plastic to pay for basic living expenses raked up higher debts with an average of $13,302, compared to other households with $7,795 worth of debts.
The research group conducted the survey by phone from during the period between April and August of last year. Some 1,205 households classified as low or middle-income families were interviewed. As an added condition, the families' incomes should have declined 50 to 120 percent. To qualify for the research, the households should have had credit card debts for more than three months.