Buy now, pay later mentality catching up with older generation

Despite the recent credit crunch, consumers are continuing to borrow money and debt levels are increasing with no sign of slowing down. But it’s not, as one may think, the younger generation that is getting themselves into the most amount debt, but instead the over 55’s.

According to the Consumer Credit Counselling Service, a shocking proportion of those in debt are in fact over 55 years old and their debt levels are accelerating faster than any other age group because of rising costs of living.

Worryingly, it is the older generation that is facing uncertainty. Research from Callcredit reveals that a staggering 16 per cent of those aged 55 and above are financially unaware and cannot define their debt levels. As a result Britain's pension gap is continuing to increase with more than a quarter (26%) of British adults failing to make any provision for retirement, according to the annual retirement confidence index (RCI) provided by Alliance Trust.

Over 1.5 million of those aged 55 and over claim they can't afford to retire at state retirement age due to lack of pension savings. Over 1.1 million retired homeowners in the UK have an outstanding mortgage on their home, with an average debt of £38,000. What is more, one in eight owes more than £50,000 putting increased pressure on retirement income. When it comes to short term debt (e.g. credit cards, personal loans etc) the situation is no better. Almost one in three have carried over short term debts for each of the last three months, with the average outstanding balance owed being £5,900.

What to do to avoid going down the Darwin route

Mark Ward, consumer debt expert at Callcredit, said: “It is essential that people start to borrow more carefully in order to avoid having to owe more than we are able to pay back. Breaking the law, like Darwin, is never the answer to solve overindebtedness, so we must be better aware of how to take control of our financial life.”

With that in mind, Ward suggests we adopt the following tips to help avoid overindebtedness amongst the older generation:

1) Try to understand how much you owe, and to who, by checking your credit report (www.mycallcredit.co.uk) – this will give you all the details of your debt and your credit score in an easy-to-read format.

2) Don’t bury your head in the sand and let the debts mount up – seek advice from a professional organisation such as the Citizens Advice Bureau or Consumer Credit Counselling Service.

3) Use cash rather than cards – that way you’ll realise exactly how much you’re spending!