Retirees Getting Snared in Credit-Card Bind

April 9, 2005 — -- Clara and Charles Unruh have lived in their Philadelphia home for nearly 50 years. And now they could lose it.

They were so heavily in debt after they retired that they were forced to put their home up for collateral in what's known as a reverse mortgage.

"I wish we never heard of credit cards," Clara Unruh said. "I wish they'd never invented them."

The Unruhs, both in their 70s, are struggling to pay creditors $100,000.

The average debt of Americans 65 and older has jumped nearly 90 percent over the past decade to more than $4,000, and those aged 50 to 64 have seen their average debt double to the same amount, according to research by Demos, a New York-based think tank.

"A lot of seniors in this country are living primarily on Social Security," said Tamara Draut, co-author of the study. "When they're on fixed incomes and they see something like health-care costs rise, they have credit cards. They really are turning into a private safety net."

The Demos study found that one-fifth of all credit card-indebted seniors spend more than 40 percent of their income on debt payments alone.

There are other factors contributing to the increase in debt -- the rising cost of prescription drugs, longer life expectancies, higher housing costs and a credit card industry that's willing to lend to almost anyone.

Seniors get lured in by pre-approved, zero-percent teaser rates in the mail even if they have low incomes or poor credit histories, not realizing the plans are packed with hidden fees.

Being in the red has serious repercussions.

"Retirees are the fastest-growing group in bankruptcy," said Elizabeth Warren, who is with the Consumer Bankruptcy Project at Harvard University. "They've gotten caught by the changing rules about money."

The Unruhs are working slowly to untangle the web they're caught up in. They say they're down from eight credit cards to one.

"I hope we're going to learn how to be more responsible using the credit cards," Clara Unruh said. "I don't think it's possible to ever give them up."

This story originally aired March 26, 2005, on "World News Tonight."