With shrinking pension pots and more consumers using credit cards, advisers should take a holistic view of borrowers’ finances and discuss equity release with them, more2life has claimed.
UK Finance Card Spending data showed there were 1.7 billion debit and credit card transactions in August, 7.7% more than a year ago.
However, the annual growth rate of outstanding balances on credit cards continued its downward trend from 8.3% at the start of the year to 3.6% in August.
Dave Harris, chief executive at equity release lender more2life, said: “While the annual growth rate of credit card debt has slowed, the reality is that some consumers are still turning to unsecured forms of borrowing to help make ends meet.
“In particular, an increasing number of older consumers are using their credit cards to make up the shortfall between their expenditure and income.
“At more2life, we found that the proportion of over-55s with credit card debt has actually increased by almost a fifth over the last 12 months, and nearly a third of this age group borrow to cover day-to-day expenses.
“Shrinking pension pots coupled with the changing demands of retirees are no doubt contributing to this reliance on unsecured borrowing.
“This is particularly concerning given the high levels of interest rates normally associated with credit card borrowing.
“On top of this, minimum monthly repayment requirements on unsecured loans could be crippling for those on small, fixed retirement incomes.
“For these consumers, knowing there are other lending options available to them, should they need to repay or manage debt, is vital.
“Dedicated advisers can take a holistic view of a customer’s finances to determine the best solution to help them not only service their debt, but also help them boost their later life income for a more comfortable retirement.”