The proportion of over-55s who have been in debt in the last five years and have borrowed using credit cards has significantly increased over the past 12 months, from 37% in 2018 to 54% in 2019, according to new research from equity release lender More 2 Life.
Meanwhile, 23% of these individuals using their bank overdraft to help boost or manage their day to day income.
The research also reveals that after mortgages, credit cards are the borrowing vehicle of choice for the over-55s, with 22% of over-55s in the UK turning to credit card borrowing to help fund their lives.
After credit card borrowing, other common forms of lending include car finance (9%), personal loans (7%) and overdrafts (7%). Interestingly, over-55s were more likely to be holding student loan debt after choosing to return to university than from a payday loan.
In addition to increased use of credit cards, the proportion of over- 55s who have left their bills unpaid has doubled in 12 months from 8% (2018) to 16% (2019). More 2 Life says this is a real cause for concern, as is the fact that 29% of this age group admit that covering day to day expenses is the main reason they have accumulated debt.
A further 26% said they have used credit cards to help pay for other outstanding debt, and one in five said they have borrowed to help pay their mortgage debts. 24% have held debt to pay for a large purchase, such as a holiday or car.
Dave Harris (pictured), CEO at More 2 Life, said: “As older generations enter retirement with lower pension pots but arguably more financial responsibilities than their predecessors, it is perhaps unsurprising to see that many are turning towards borrowing to help fund their later lives. Whilst credit cards have become a normal part of many people’s financial management and some will be comfortable servicing this debt, this is not true for everyone.
“If you are unable to pay your bills and borrowing on credit to keep afloat then it is vital that you consider all your financial options as it is only likely to get worse. Currently, around one in five of our customers use equity release to repay debt, so we know that these products and other later life lending options can help people facing these types of issues. They can typically benefit from a lower interest rate than on most credit cards and make interest or capital repayments if they wish to manage their borrowing.
“With homeowners releasing £1.85bn of housing wealth in the first half of 2019, it’s clear that more and more homeowners are realising the benefits of unlocking the wealth tied up in their homes to help fund their retirement. Ultimately, with an abundance of later life lending options available, it is vital that not only do customers realise that they have options but that speaking to a specialist financial adviser can help them in the long term.”