The average American with personal debt now owes $21,700, according to a new Northwestern Mutual study.
But how that debt is distributed varies between generations
Among boomers with debt, credit card debt is the most common (29%), followed by auto loans (11%) and medical bills (5%). While each presents different risks, credit card balances tend to do the most long-term damage because of high interest rates — which is why experts say they deserve special attention. Learn More: I’m a Retired Boomer — 3 Things I Wish I Had Done Differently To Better Prepare For Retirement Longevity Find Out: 8 Clever Ways Retirees Are Earning Up To $1K per Month From Home Here’s a closer look at why credit card debt is so common among this generation, how they can best tackle it, and how to balance paying off credit card debt and other types of debt.
Why Credit Card Debt Is So Common Among Boomers Nearly 1 in 3 boomers have credit card debt — and there are several reasons for this, according to Dexter T. Wyckoff, growth and development director and financial advisor at Northwestern Mutual. – High APRs and missed fine print: “Carrying balances exposes consumers to interest and penalties that make pay-down harder.” – Convenience and budgeting blind spots: “Easy card use plus unclear budgets let small overspends accumulate into revolving balances.” – Inflation and cost pressures: “Americans cite inflation as the top obstacle to financial security, and boomers are notably pessimistic about inflation rising. Rising prices can make it hard for people to manage debts, especially those on a fixed income.” – Insufficient emergency buffers: “More than half (52%) of adults admit they prioritize building wealth over protecting assets, leaving gaps that turn one-off emergencies into credit card debt.” – Alternative payment plans and complexity: “Widespread use of buy now, pay later and multiple payment plans complicate tracking and repayment.” Considered together, these factors explain why many…