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Card debt being paid off at slower rates?

July 21st, 2013 at 1:06 pm

Lara   San Antonio bankruptcy attorneyAccording to a recent article, an Ohio State University study found that young Americans borrow a lot of money with credit cards, and they repay the debt much more slowly than generations before them.

Lucia Dunn, an economics professor at Ohio State University, has suggested that these new findings mean that the typical young credit card holder will probably die in debt to credit card companies.  Dunn was a co-author of the study, along with Sarah Jiang, who is the manager of credit and business strategy at Capital One Financial in McLean, Va.

According to Professor Dunn, if this pattern continues, the United States may end up with a serious financial crisis among the elderly people who cannot pay off their card debts.

The study was originally published in an issue of Economic Inquiry.  It was based on two long-term surveys, one of which included not only borrowing data but payoff data as well.  This information has not been previously available to many researchers.  It has allowed more accurate predictions in regards to when Americans will be financially able to pay off their card debts.

There are several reasons as to why these younger generations are struggling with debt more than those before them.  Credit is now much more readily available, and general attitudes toward debt have changed dramatically.  According to Dunn, “It’s a lot more socially acceptable to have debt and go into bankruptcy.”

The results have also found that younger people are paying off their massive credit card debts at slower rates.  The current payoff rate is approximately 24 percentage points lower than their parents’ and a dramatic 77 percentage points lower than their grandparents’ rate.

There are other factors that play into this, such as the skyrocketing levels of student debt, which leads to trouble paying off card debt.

There was a bright side to the study though.  Researchers found that if the minimum required monthly payment on cards were to be raised, borrowers would be forced to pay off more debt and possibly eliminate debt much earlier in their lives.

Credit card debt has become an increasingly serious problem for all Americans.  If you or somebody you know is struggling with debt and/or bankruptcy, do not hesitate to contact an experienced San Antonio bankruptcy attorney to answer your questions and get you back on the right track.

 

Call today for a FREE Consultation

210-342-3400

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