Our Tennessee readers are no doubt aware of the harmful effects of the recession and the slow economic recovery. Just today the unemployment rate ticked up again. As a result, many people have had to use credit cards to make major purchases and pay their bills. This is especially true among young adults, who have had to put up with one of the worst job markets in decades. For many, carrying a large amount of credit card debt is just a normal part of life.
A new academic study confirms this view, when it found that young adults are carrying thousands more in credit card debt than older generations and are taking longer to pay it off.
The study, published in the journal Economic Inquiry, looked at credit card data for more than 32,000 people who held Capitol One credit cards from the years 1997 to 2009. The study looked at people between the ages of 18 and 85. It found that people born between 1980 and 1984 carry $5,700 more in credit card debt that those born 30 years prior and $8,200 more than those born 60 years earlier.
One could reasonably predict that the problem will be even worse in the upcoming years for those born between 1990 and 1994 if the job market and wages remain stagnant.
One psychology professor also heralds the Internet boom as the reason younger adults are breaking out the plastic more than members of generations past. He said the ease of online shopping and the explosion of social media fuel people's desire to spend more and show off purchases.
But it appears that many young people will eventually need bankruptcy protection or services such as debt consolidation. Consulting with an experienced professional may be the best way to go before making too many other large purchases.
Source: The Huffington Post, "Credit Card Debt: Study Predicts Millions Will Die In The Red," Laura Rowley, Jan. 22, 2013