Buy now, pay later mentality is catching up with the older generation
Despite the recent credit crunch, consumers are continuing to borrow money and debt levels are increasing with no sign of slowing down. But it's not, as one may think, the younger generation that is getting themselves into the most amount debt, but instead the over 55's. According to the Consumer Credit Counselling Service, a shocking proportion of those in debt are in fact over 55 years old and their debt levels are accelerating faster than any other age group because of rising costs of living.
"Our own research tells us that 16pc of over 55's cannot define their debt levels - it is a sobering reminder about the importance of being responsible when taking on debt and always thinking about how you will repay the money you owe," said Mark Ward, consumer debt expert at credit report provider, Callcredit.
Worryingly, it is the older generation that is facing uncertainty. Research from Callcredit reveals that a staggering 16 per cent of those aged 55 and above are financially unaware and cannot define their debt levels (2). As a result Britain's pension gap is continuing to increase with more than a quarter (26%) of British adults failing to make any provision for retirement, according to the annual retirement confidence index (RCI) provided by Alliance Trust.
Over 1.5 million of those aged 55 and over claim they can't afford to retire at state retirement age due to lack of pension savings (1). Over 1.1 million retired homeowners in the UK have an outstanding mortgage on their home, with an average debt of £38,000. What is more, one in eight owes more than £50,000 putting increased pressure on retirement income. When it comes to short term debt (e.g. credit cards, personal loans etc) the situation is no better. Almost one in three have carried over short term debts for each of the last three months, with the average outstanding balance owed being £5,900 (1).
With that in mind, Ward suggests we adopt the following tips to help avoid overindebtedness amongst the older generation:
1) Try to understand how much you owe, and to who, by checking your credit report (www.callcreditcheck.com) - this will give you all the details of your debt and your credit score in an easy-to-read format.
2) Don't bury your head in the sand and let the debts mount up - seek advice from a professional organisation such as the Citizens Advice Bureau or Consumer Credit Counselling Service.
3) Use cash rather than cards - that way you'll realise exactly how much you're spending!
1 - Research from Scottish Widows
2 - Research was conducted online by YouGov in September 2007 and the total sample size was 2,105 adults
• Callcredit (www.callcredit.co.uk) is the UK's most innovative, state-of-the art credit reference agency, with an extensive range of information and value added services for businesses and individuals.
• Callcredit check is the consumer arm of credit reference agency Callcredit and provides consumers with online access to the details of their credit file at www.callcreditcheck.com
• Callcredit has harnessed state-of-the-art information technology with an unrivalled knowledge of the industry's needs to develop a range of innovative information solutions. Solutions that are enabling major lenders and a host of other blue chip companies to address regulatory requirements, make better credit decisions, target new customers more effectively and manage existing customers more profitably.
• Callcredit forms part of the Skipton Information Group, and is one of five core businesses along with database management company EuroDirect, market analysis firm GMAP Consulting, online payment service provider, Legatio and DecisionMetrics, specialists in the development and implementation of scorecards and affordability assessment.