Age vs Credit Card Debt Infographic

Many Americans start their adult life with a considerable amount of debt, but does it get better later on? The statistics are not painting a good picture. Many Americans under the age of 25 owe at least $709.79 on average on their credit card. This figure would be considerably higher if the mounting student loan debts were also taken into account.

Credit Card Debt and Age

Debt is a slippery slope and Americans seem to accumulate more debt as they get older. Credit card debt seems to rise significantly after the age of 25, with average figures reaching $7,327.42. The Baby Boomer generation tops the charts with an average credit card debt of $9,878.09.

Saying that, not all is lost, as statistics show that debt reduced significantly when Americans enter their senior years, with people of 65 years or more, owing a usually manageable $1,755.33 on their credit card.

Average Debt per Age

All the aforementioned figures concerning the amount of credit card debt pale in comparison when statistics include other kinds of debt, such as education loads, vehicle loans, mortgage debts etc., However, credit card debt statistics are representative of the overall trend, debit soars after the age of 25 and does not decrease until after the age of 65.

This means that most Americans spend most of their working lives as adults, being in considerable amount of debt. This does not bode well for those who lose their employment, or fall in different types of difficulty, which makes keeping up with their debt payments hard.

When all the different types of debt are taken into account, the under 35s are burdened with the least amount of debt at $76,000 on average. Debt soars to $134,600 after the age of 45 and reduces to $34,500 after the age of 75.

Ways to Manage Debt

Is debt unavoidable? The answer is, no, not really. Debt is part and parcel of adult life, but the amount of debt and the way we manage it can vary greatly. The younger people are the more reckless they seem to be with the amount of credit they require, ending up using credit for everyday expenses and getting caught up in an endless cycle of paying the minimum payment for the debts.

This is a very important factor in their debt mounting up and becoming unmanageable. In an ideal world, credit card debt should be paid in full every month, however, very few of us are able or willing to do that.

Credit reporting agencies take a very dim view to people who are using most of their available credit, without clearing it every month. This means that buying power decreases, and the likelihood for the individual to be able to acquire credit decreases significantly. This can lead to mounting debt, which not only can become hard to manage, but in the face of unemployment etc., the individual can find themselves very near bankruptcy.

How to Manage Debt in Every Decade of your Life

It is generally regarded as good credit practice to start thinking about the future as soon as one hits 30. This is generally the most productive decade of one’s life, and the time to start thinking investing in pensions, buying in stocks and bonds, investing in property and trying to keep their credit card and other borrowing low compared to their income. This will lay a very solid financial foundation for the rest of their adult life.

The fourth decade of one’s life is a very good time to cut back on spending and start saving religiously. Laying a good foundation for retirement will alleviate stress and ensure that the individual can cope with any eventuality. It is especially critical that debt remains low during this decade of life, as it is a very good indicator of one’s financial future.

Once one has reached the fifth decade of their life, it is generally suggested that it is a good time to start clearing financial debt. Pay off credit cards, mortgages, and ensure that all accumulated debt remains low and manageable. It might also be a good time to start investing more into pensions, and looking at different options, such as private pensions and health plans.

In one’s sixth decade all financial investments should start paying off as one is approaching retirement. Part of the plan in this decade is to ensure loved ones will be financially secure should something happen, or should one’s health deteriorate, incurring extra expenses. If all steps have been followed and financial decisions were carefully approached, then an individual in the 6th decade of their life should have no money troubles, no mounting debt and be financially secure.

Car Loans and Mortgage Payments

An interesting trend can be observed in consumers with car loans, who are the ones with the highest accumulated debt from the third to the fourth decade of their life. Consumers with mortgages are the most burdened throughout the third and fourth decade of their lives.

Some of the latest figures concerning mortgage debt have shown a slight fall in mortgage debt during the most productive years of an individual’s life. This does not necessarily mean that consumers borrow less, but rather than the kind of property they invest in is generally cheaper. It might also mean an increase in the amount of people chasing to rent rather than buy their own property.

Credit Scores

One of the most incredible facts about an individual’s accumulated debt is the way their credit score is calculated. Generally speaking, the more debt one has the more lenders are willing to lend, provided that individual is handling payments timely and pays a big chunk off their credit card balance each month.

This might sound strange, but it is based on statistics showing that consumers who manage their debt are of a considerably lower risk to lenders, than those who never had credit before, hence their habits are yet to be recorded.

Low credit scores are damaging to an individual’s ability to have access to credit, but it is not always bad news, as credit scores can vary and can certainly improve over time, provided the consumer ‘proves’ themselves worthy of more credit.

Another controversial statistic shows home ownership as the main cause of debt and wealth in the USA, however, with mounting student debts invested in gaining a university education, Americans delay home ownership until their early 40s.