UK: Pensioners' plastic debts hit record high

New figures from GfK NOP reveal that retirees now put £1.6 billion (about R17.6 billion) on average a month on credit cards, an increase of 20% since the beginning of the year (2). In June alone retirees spent an average of £354 (about R3900) on plastic (3), a high-water mark that has only been reached once before - in October 2008 at the height of the financial crisis and the run on the banks (4).

Davyd Edwards, financial researcher at GfK NOP, said: "Pensioners are piling more than ever before on the plastic and keeping it there. The cost of living has rocketed while income from savings and investments has fallen, leaving retirees having to adapt to this shortfall. With the increase in VAT kicking-in over the New Year, benefits set to increase at a slower rate and economic uncertainty expected to continue, the financial pressure on pensioners will only increase over the coming months."

Wise grandchildren

While pensioners shift more on to credit cards, their grandchildren have heeded the call for thrift, with almost £200 million (about R2.2 billion) being wiped off the outstanding credit card balances of the under-25s compared to the depths of the credit crunch in September 2008 (5). As well as paying down more of their debt, young people have also stripped back their purchasing, with monthly plastic spend also falling from £242 to £221 (about R2700 to R2400) in the same time frame.

Edwards continued: "We may be seeing the start of a generational shift, with younger consumers turning to thrift after the credit-fuelled extravagance of the last few years. The young may be starting to realise that credit's gone and shows no sign of coming back soon."

Footnotes:

All figures are based on three-month rolling data up to the date referenced:
1. In June 2010 retirees' outstanding credit card balance was £1.1 billion (aboutR12.1 billion) up from just under £900 mn in December 2009. The last time the June 2010 was exceeded was in January 2003 when it reached £1.2 billion (about R13.2 billion).
2. Retirees spent £1,4 billion (about R15.4 billion) on credit cards in January 2010, increasing to an average monthly spend of £1,6 billion (about R17.6 billion).
3. Retirees' average spend on credit cards in June 2010 was £354 (about R3900).
4. Retirees' average spend on credit cards in October 2008 was £354 (about R3900), a figure matched only in June 2010.
5. The outstanding balances on under-25s credit cards was £789 million (about R8.7 billion) in September 2008, falling to £593 million (about R6.5 billion) in June 2010.