These days, more people are getting into credit card debt. Pensioners aged 65 to 69 and who unlocked equity from their homes had average credit card debts of £8,881. This figure increase to £9,048 for those aged 70 and over.
The company which conducted the survey of over 3500 customers has warned that many over-65’s are unlikely to ever be able to clear all their credit card bills.
The UK Government has announced plans to force card firms to clear debts at higher rates of interest first as well as banning rate rises and credit increases for people in financial difficulty and giving customers 60 days to reject rate rises.
Key Retirement’s analysis shows that pensioners making the monthly minimum repayment on a balance of £8,967 at an average 18.8% rate would pay £141 out of average gross pensioner incomes of £16,000.
That equates to 10% of monthly income before tax – but someone only paying the minimum would take 30 years and one month to clear the debt without spending any more on the card.
Dean Mirfin, Business Development Director at Key Retirement Solutions, said: “Debt is a way of life for a substantial number of people and the over-65s are not immune. Many are perfectly comfortable with owing money on their credit cards and it can be a sensible way of planning for major purchases.
“However the over-65s are more at risk as once they retire they may no longer have the income to service the debt and in many cases to ever clear their credit card balance.
“Many of them do though have substantial wealth tied up in their homes which represents a potential source of income particularly when other sources of retirement income are under pressure from low interest rates and annuity rates.
