• by Derek Dunham , Columnist, May 7, 2018

In August 2015, LendingTree, one of the nation’s leading online loan firms, conducted a survey on credit card behavior and spending. Reportedly, nearly 90% of Boomers own a credit card, compared with just over 60% of Millennials. Certainly, the younger generation has not had the same opportunity to build and carry credit, but a difference of nearly 30% is a large one. Credit card providers have learned this and are continually creating new products that appeal to the Boomer demographic, providing them with new ways to borrow, with fewer strings attached. How Boomers approach credit spending is an important topic for businesses to understand, especially as it evolves as they age.

Interestingly, the survey found that Millennials are less reliant on credit cards than are older generations — especially Baby Boomers. It is reported that only 52.65% of Boomers were reliably paying off their credit cards each month and not carrying a balance. Roughly 55% of surveyed Boomers believed that a credit card is required in today’s world, while only 10% said that they didn’t need one at all. On the positive side, only 6% of sampled Boomers said that they pay only the minimum required amount each month.

According to ARGI Financial Group, the average 65- to 69-year-old owes $6,876 in credit card debt. The company also notes that it would take more than two times the maximum monthly Social Security payment to pay off that balance. This highlights the challenges faced by older people who are living on a limited-income portfolio but are not living within their means — whether by circumstance or by choice.

The more common factor relating to Boomer credit card debt is circumstance. Boomers are the original sandwich generation, meaning that they may find themselves taking care of adult children and grandchildren while dealing with frail and elderly parents who are living in skilled-care communities. This causes their financial resources to be spread thin and credit cards to become the safety net of choice. However, income generally declines as we age, especially after retirement. What once was a manageable balance soon becomes an albatross around one’s neck from which a person cannot escape. Couple this with ever-rising health care costs, and the chances of a personal credit crisis mount exponentially.

The other side of the credit coin constitutes those in deep debt by choice. Who would want such a thing? There’s a small subset of Boomers and seniors who have embraced the phrase “you can’t take it with you” like never before. Rather than concerning themselves with the credit card game, these people embrace the monthly minimum and kick the can down the road, where it ultimately lands with the executor of their estate. Credit cards give these individuals the ability to travel and live a bon vivant lifestyle without the required funds. In their minds, the creditors won’t come knocking until they’ve passed on, leaving their children and beneficiaries holding the purse strings. 

What can we, as marketers, learn from this trend? We know this issue is going to have an impact on Boomer credit scores, making large or luxury purchases more challenging. Aging services providers who have been investing in building beautiful, high-end retirement communities may discover a shrinking marketplace as age- and income-qualified individuals become a scarce commodity. Eventually, the inability to repay debts will impact all sectors, from health care to retail, as spending restricts due to lack of credit.

Boomers came of age alongside the credit card, and their trajectories are intertwined in many ways. Younger generations, especially Millennials, are conscious of the challenges being faced by their parents and grandparents as they carry too much credit card debt. As a society, we are going to need to counsel our aging population on smart credit practices and provide ways for them to pay down their debt — or we, as a society, may end up paying a far higher price.