Few economists debated the results of a recent study by policy group Demos, indicating that Americans' household credit card debt rose by 3% over the past four years. However, financial analysts and regulators have jumped at reports from the same study that show credit card balances for low-and-middle income senior citizens soaring by 26% over the same period. Possible causes for the jump include:
· Widening gaps between health care costs and insurance coverage, forcing some seniors to pay for medical expenses with credit cards.
· Higher finance charges caused by rising interest rates or by the expiration of promotional offers.
· Sudden jumps in energy prices, leaving some seniors little choice but to use credit cards for gasoline, electric, and home heating oil.
In its report, Demos calls credit cards the "plastic safety net" that most Americans turn to for help with basic living essentials. Senior citizens, accustomed to cashing out home equity to cover revolving debt, may find themselves jeopardized by falling real estate values and shrinking portfolios. Without access to additional income, the study's authors suggest, more seniors will sink deeper into debt.