NEW YORK – Older Americans enjoy a reputation as people who shy away from debt and avoid using credit cards. But a study released by Demos, a public policy group, shows the average self-reported credit card balance carried by those over age 65 rose 89% in the decade between 1992 and 2001 to $4,041. The rise was even more startling among the newly retired, aged 65 to 69. Their credit card balances averaged $5,844, a jump of 217%. The study, "Retiring in the Red: The Growth of Debt Among Older Americans," suggests these aren't amounts the elderly can readily shrug off. In fact, among seniors with incomes under $50,000 – that's 70% of them – about one in five is spending 40% of their income on debt payments. Are Grandpa and Grandma running up their card balances to pay for Caribbean cruises or large-screen television sets? Not really, according to the study. Demos found seniors are spending an average of $3,526 a year in out-of-pocket health care costs, paying for much of it with credit cards. Reporters writing about the study don't seem to have much trouble locating examples. The Baltimore Sun described a couple forced to retire in their 50s because of health problems. Illness and drug costs grew. By the late 1990s they pulled out their credit cards to pay for medication. The balance plus interest reached $14,400 within a few years. The Christian Science Monitor encountered an older Colorado couple already struggling to pay off credit card debt when a series of medical emergencies posed $3,000 in bills not covered by health insurance. Now the wife, in her late 60s, has been laid off and the financial squeeze is even tighter. Demos researchers discovered the credit card debt of middle- to low-income families ages 55 to 64 without health insurance increased 169%, compared to only 37% for families with like incomes who were covered by health insurance. One result, according to figures from the National Association of Consumer Bankruptcy Attorneys, is the number of Americans age 55 or older filing for bankruptcy has tripled in the past 10 years. Tamara Draut is one of the authors of the study. She says credit counselors are seeing more and more seniors coming into their offices for advice. She suggests credit unions can help. "One of the great things about credit unions is they tend to offer a much more innovative array of products. One of the things that has happened in the last 20 years is credit cards have replaced the short-term unsecured loan," Draut says. "In some ways I think that's because consumers don't have to go and plead with a bank officer for a loan so they can buy their prescriptions. But the negative is it (credit card debt) is at a much higher cost than a small loan through their credit union. "One of the things I think would be of interest to credit unions is providing alternatives to credit cards. Interest rates on credit cards have risen astronomically, even though we're in a time of historically low interest rates. Many of the seniors we talked to were paying 23 and 25 percent." Draut would also like to see a universal, portable pension system that would let people move into retirement with more savings to tap as they face rising prescription drug costs. -

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