Credit card debt rises faster for those 65 and older

— -- Cash-strapped older Americans are racking up credit card debt faster than other consumers amid dwindling retirement portfolios and rising medical costs, a study shows.

The study, which will be released Tuesday by Demos, a liberal public policy group, shows that low- and middle-income consumers 65 and older carried $10,235 in average card debt last year, up 26% from 2005. Card debt for all borrowers surveyed rose 3% during that time, to $9,827.

Overall, revolving debt — mostly on credit cards — grew during much of 2008, the Federal Reserve says. But as consumers pared spending, outstanding debt also fell. From the fourth quarter of 2008 through the first quarter of 2009, revolving debt slipped 2.3% to $939.6 billion.

Vulnerable consumers are turning to credit cards for necessities, not luxuries, Demo's survey shows. For instance, more than half of households say medical expenses contributed to their credit card debt.

"The frivolous spending idea, that's not what's driving families into crazy debt," says Jose Garcia, a Demos associate director. "The expense that most affects families is the cost of living."

Demos' phone survey, conducted April through August 2008, polled 1,205 low- and middle-income households, defined as those with 50% to 120% of local median income. The margin of error is plus or minus 3.7 percentage points.

The data are in line with other industry research showing that seniors are becoming the face of the indebted.

From 1992 through 2007, the latest data available, older Americans' credit card debt grew faster than the overall population, according to the Employee Benefit Research Institute, a non-partisan group that studies economic security.

"You see a great increase in credit card debt for people right near retirement age," says Craig Copeland, a senior research associate at EBRI. "They're probably still working, but they're also the most likely to become disabled," which could force them to rely on credit cards.