'Squeezed' generation struggling with credit cards

15 March 2010 09:17:43

Credit card bills are proving problematic for one age group.

The economic downturn has applied huge financial pressure to families all over the country, particularly in light of the borrowing culture that exists nowadays. Although young adults on low incomes and those attempting to enter the job market have been hit hard, new independent research has found that an older generation is also suffering badly.

Credit-squeezed

According to a new YouGov study commissioned by credit reference agency Callcredit Information Group, 35% of Britons manage to successfully pay their credit card bills in full at the end of each month. However, this figure drops to 27% for 35 to 45-year-olds, many of whom are struggling under the weight of supporting young families. In addition, the report noted that while one in 20 (5%) people can no longer make full credit card repayments every month, 7% of the older category are faced with this problem. Graham Lund, managing director at Callcredit, described the findings as "extremely alarming".

"A significant proportion of people aged 35 to 44 are living on a financial precipice, where just one negative event, such as a reduction in paid overtime or an unexpected expense, could have disastrous financial consequences," he said.

Desperation and dishonesty

The research firmly highlighted that households are finding it increasingly difficult to meet their commitments in terms of credit repayments. However, another trend emerged which could arguably be viewed as even more worrying. The study of 2,129 adults revealed that 13% of those aged between 35 and 44 have over-estimated their income when applying for a credit card, compared to 9% for the average respondent. Furthermore, 10% of people in this age group have applied for credit cards and other forms of financial support despite knowing that they would be unable to match their scheduled repayments. This figure was found to be almost double the typical average (6%).

"If the borrower is inflating their income significantly and then maxes out their high credit limit, they are running a serious risk of getting into financial difficulties and being unable to repay the debt," added Mr Lund.

Tackling credit concerns

Consumers must be entirely certain that they can afford a new credit card before making an application. As a result, drawing up a clear and concise budget detailing income and expenditure is highly recommended before deciding to secure the card. Britons would also be well advised to ensure they are in regular contact with their lenders if they are concerned about defaulting on a credit card payment. A number of debt charities, such as the Consumer Credit Counselling Service, are available to help individuals make the best decisions regarding their financial commitments.

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