Young Adults pay off Credit Card Debt Slower than Older Adults
(Best Syndication News) - Credit card debt balances are considerably higher for young adults than for the elderly, according to a new study. The researchers also found that the younger adults are taking more time to pay off their balances.
Lucia Dunn, co-author of the study and professor of economics at Ohio State University, suggested that if the trend for the young adults continues into retirement, there could be serious financial problems in the years to come. She continued to explain that if their projections are correct, many of these young adults who have credit card debt will die owing the lenders money.
Young adults born between 1980 and 1984 have considerably more credit card debt than the previous two generations during the same age in life. Compared to their parents, who were born between 1950 and 1954, the current 1980-84 generation has an average of $5,689 more in debt. Compared to their grandparents, born between 1920 and 1924, the 1980-84 generation had an average of $8,156 more debt.
The study did find that when the credit card company increased the minimum monthly payments because of the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act, the payments often times exceeded the minimum. By paying off more than the minimum monthly amount, the debt burden may be reduced or eliminated several years sooner.
The researchers used information gathered from the Ohio Economic Survey conducted between 1996 and 2002 and a second ongoing survey since 2005 from the Consumer Finance Monthly.
The study results are presented in the January 2013 issue of the journal Economic Inquiry.
By: Dave Reddy