The high cost of easy credit
Credit cards are pictured on a computer's keyboard on February 5, 2013 in Rennes, western France.
DAMIEN MEYER/AFP/Getty Images
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Audio transcript
[MUSIC PLAYING] CHRIS FARRELL: Borrowing and taking out credit is something that most adults have in common, but paying the bill for accumulated debts can weigh heavily on older Americans of modest means. The debt payment pressure compounds after living on a fixed income, such as Social Security.
Odette Williamson, senior attorney with the National Consumer Law Center, says several factors taken together have contributed to the rise in debt by older adults. Among them?
ODETTE WILLIAMSON: Cut back in some safety net provisions. It has to do with increase in expenses, most recently due to inflation. And it has to do with the fact that older adults are aging with just fewer resources. Before, we had pensions. Now, not a lot of people have that. And so, they're just aging with less income and more debt.
CHRIS FARRELL: Tonya Brinson is the owner of SLAP Financial Consulting. SLAP stands for Sounds Like A Plan.
TONYA BRINSON: I also want to put an emphasis on those who are most vulnerable. The low-income seniors, the Black and brown elders, women, and those without pension benefits. And then you have to be realistic about those systemic factors. For instance, those racial wealth gaps, the wage gaps, the caregiving responsibilities, the medical debt disparities, and lack of access to retirement planning. These all compound over a lifetime and become debt in later years for that population.
CHRIS FARRELL: Debt also reflects that it's easier than ever to borrow. The story of consumer finance is one of increased access, more choice, and greater household risk.
ANNAMARIA LUSARDI: If you look at the innovation in financial markets, a lot of innovation is on the borrowing and debt side. It's very much left to the borrower to decide the amount to borrow. Right? So there is a lot more supply, and it's very easy to borrow.
CHRIS FARRELL: Annamaria Lusardi is Director of the Initiative for Financial Decision-Making at Stanford University.
ANNAMARIA LUSARDI: We have more access to mortgages, to credit cards, to many forms of debt. Recently, buy now, pay later, right? And so this might have also given rise, therefore, to, indeed, taking up more debt. But some of this debt might be problematic.
[MUSIC PLAYING]
CHRIS FARRELL: Debt makes it harder to save while working and drains scarce resources when retired.
The Buy Now, Pay Later series is in partnership with Next Avenue, a nonprofit news platform for older adults. Produced by Twin Cities PBS.
Odette Williamson, senior attorney with the National Consumer Law Center, says several factors taken together have contributed to the rise in debt by older adults. Among them?
ODETTE WILLIAMSON: Cut back in some safety net provisions. It has to do with increase in expenses, most recently due to inflation. And it has to do with the fact that older adults are aging with just fewer resources. Before, we had pensions. Now, not a lot of people have that. And so, they're just aging with less income and more debt.
CHRIS FARRELL: Tonya Brinson is the owner of SLAP Financial Consulting. SLAP stands for Sounds Like A Plan.
TONYA BRINSON: I also want to put an emphasis on those who are most vulnerable. The low-income seniors, the Black and brown elders, women, and those without pension benefits. And then you have to be realistic about those systemic factors. For instance, those racial wealth gaps, the wage gaps, the caregiving responsibilities, the medical debt disparities, and lack of access to retirement planning. These all compound over a lifetime and become debt in later years for that population.
CHRIS FARRELL: Debt also reflects that it's easier than ever to borrow. The story of consumer finance is one of increased access, more choice, and greater household risk.
ANNAMARIA LUSARDI: If you look at the innovation in financial markets, a lot of innovation is on the borrowing and debt side. It's very much left to the borrower to decide the amount to borrow. Right? So there is a lot more supply, and it's very easy to borrow.
CHRIS FARRELL: Annamaria Lusardi is Director of the Initiative for Financial Decision-Making at Stanford University.
ANNAMARIA LUSARDI: We have more access to mortgages, to credit cards, to many forms of debt. Recently, buy now, pay later, right? And so this might have also given rise, therefore, to, indeed, taking up more debt. But some of this debt might be problematic.
[MUSIC PLAYING]
CHRIS FARRELL: Debt makes it harder to save while working and drains scarce resources when retired.
The Buy Now, Pay Later series is in partnership with Next Avenue, a nonprofit news platform for older adults. Produced by Twin Cities PBS.
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