Later Life  

Pensioners are racking up large credit card debts

Pensioners are racking up large credit card debts

British pensioners are racking up large credit card debts to cope with unexpected bills, with nearly one in five of those aged 65 plus struggling to pay off the resulting balances, research has revealed.

A poll conducted by researchers Consumer Intelligence, on behalf of Key Retirement, found 18 per cent of those aged 65 plus are wrestling with credit card debts that arose because of bills that weren't anticipated.

The survey found the average balance was around £3,500, with some areas of the UK worse off than others.

Jazz Jhumat, a financial adviser at Manchester-based Danestone Mortgages and Financial Services, said this theme has been the subject of numerous industry conferences and seminars in recent months.

She said: "It has become apparent that this situation isn't improving. We are repeatedly being told that debt is growing for some of the older generation, but there are many solutions available to them."

Retirees in the West Midlands were facing the largest credit card burdens, with an average credit card balance of £4,700 from unexpected expenses, followed by pensioners in the north west and north east of England who had an average balance of £3,900.

Ms Jhumat urged the government to make retirees more acutely aware of the solutions available through qualified financial advisers and said increasingly innovative financial products were coming on to the market.

She said: "One of the things we are getting a lot of enquiries about are lifetime mortgages and equity release products.

"It used to be an area that wasn't widely discussed, but now it is regulated and above board and can really help later life clients."

Dean Mirfin, chief product officer at Key Retirement, said it is astonishingly easy to sleepwalk into debt for many of today's retirees.

He said: "It is not possible to plan for everything and sometimes an unexpected bill will mean having to rely on credit cards to fund it.

"The problem then compounds itself if people cannot clear the balance and get caught by another surprise bill.

"Unfortunately, it all adds up, which means a serious financial burden in retirement. People need to get help and look at all their assets which should include their property if they are a homeowner."

Key Retirement's survey concluded while 61 per cent of those aged 65 plus anticipate they will be able to clear their debts very shortly, 29 per cent believe it could take up to five years and a further 6 per cent are not convinced they will ever be able to clear their debts.

The poll follows separate research conducted by CEBR, entitled 'Debt in Old Age 2018', which found that levels of secured and unsecured debt held by those aged 65 plus has increased from £70bn to around £85bn in the past two years, with £12bn of that attributed to unsecured debts.