Millennials May Take Credit Card Debt To The Grave
If you are looking for happy news about the financial future of young adults, you might want to stop reading. Research released last month finds that those born in the early 1980s are charging more on their credit cards -- and spending longer paying their balances -- than any generation before.
Researchers from Ohio State University not only looked at the amount of credit card debt held by young adults, but also the rate at which they are paying off their balances. The findings paint a chilling picture of a generation that may be receiving credit card bills until the day they die.
Are young adults in financial hot water?
To come to their conclusions, researchers used a statistical model to determine how much credit card debt different demographic groups will have at the same stage of their lives.
According to the results, children born between 1980-1984 -- also known as Millennials -- are projected to owe $5,689 more in credit card debt than those born between 1950-1954, a generation many Millennial parents belong to. The debt of Millennials is projected to be $8,156 greater than those born between 1920-1924, a group meant to capture their grandparent's generation.While the level of credit card debt is concerning enough alone, it is not the only red flag that appears regarding the financial future of young adults. According to the study's authors, the data also suggest Millennials may continue to charge purchases until they are 70 and may even die owing money on bank cards. "Our projections are that the typical credit card holder among younger Americans who keeps a balance will die still in debt to credit card companies," said Lucia Dunn, an OSU economics professor and a co-author of the study, in a written statement.
Avoiding the credit card trapPart of the problem of perpetual credit card debt seems to be linked to slow pay-offs among young adults. According to the OSU research, children born between 1980-1984 have payoff rates that are 24 percent lower than their parents and 77 percent lower than their grandparents.
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