Credit Card Debt: Study Predicts Millions Will Die In The Red

01/22/2013 05:49 pm ET | Updated Mar 24, 2013
  • Laura Rowley Executive Producer, Original Video and Partnerships, The Huffington Post

Millions of young Americans will die in debt to credit card companies, according to new research from Ohio State.

People in their late 20s and early 30s (born 1980 to 1984) carry significantly higher credit card debt than older generations and pay it off more slowly, the study found. They have about $5,700 more than people born 1950 to 1954, and $8,200 more than those born 1920 to 1924. And they'll continue to charge well into their 70s, the study predicts.

Researchers examined Capitol One credit card data for more than 32,000 people from 1997 to 2009, including borrowers age 18 to 85. The study, which appears in the January issue of the journal Economic Inquiry, was the first to examine both sides of the equation -- how people borrow and how they pay off their cards -- allowing researchers to forecast payoff times.

It's not surprising that younger generations carry more debt, given stagnant wages; the rising cost of basics, such as housing and education; and the financial losses and employment woes wrought by the Great Recession.

But perhaps as importantly, people born in the early 1980s have been guinea pigs in a massive social experiment, as the physics of spending have been radically changed by the internet. Stuart Vyse, professor of psychology at Connecticut College, describes them in his book "Going Broke: Why Americans Can't Hold On to Their Money."

"Spending once required getting in the car, going somewhere, climbing stairs, lifting," Vyse told me in an interview when his book was published. "Spending responses that are easy to make are going to result in more impulsive decisions -- our wiser selves don't have time to be activated."

And in those analog days, exposure to aspirational luxury was the realm of high-end magazines and cheesy shows like "Lifestyles of the Rich and Famous." Now it's everywhere, and defining oneself by style, aesthetics and consumption patterns -- shared with a network of followers -- has become a cultural obsession. You can explore your inner stylist at 3 a.m. on sites like and instantly buy the look you put together on plastic. (Then post it on Pinterest to inspire your fans to spend as well.)

As author Virginia Postrel wrote in "The Substance of Style": "Before we say anything with words, we declare ourselves through look and feel: Here I am. I'm like this. I'm not like that ... . Aesthetic identity is both personal and social, an expression both of who we are and with whom we want, or expect, to be grouped ... ."

In short, at a time of greater income volatility, lower real wages and reduced job security -- at a time when people need to be more disciplined than ever about planning, saving and investing -- the temptations and ability to spend, particularly in a quest for self-definition, have never been greater.

Some observers would suggest indebtedness is no big deal; everyone carries a little credit card debt. So what if some borrowers carry it to the grave? But it matters on both the micro and macro levels. First, debt can literally make you sick. Ulcers, migraines, back pain, anxiety, depression and even heart attacks are the reported consequences of debt stress. Secondly, the U.S. economic recovery depends on consumers moving out of the red, according to a recent paper, economist Robert Gordon. He identified consumer debt as one of six headwinds facing growth.

Despite enormous economic challenges, debt does not have to be a given. While our virtual and deeply connected culture offers more seductive ways to spend than ever, it also offers more avenues than ever to find like-minded others who have used commitment and creativity to pay down or avoid debt. There's the engineer who paid off $75,000 in loans in a little over two years by delivering pizzas; the savvy college student who put himself through the University of Massachusetts without scholarships or debt; the young couple who built an amazing home in a school bus (admittedly, quirky, but I couldn't tear myself away from this DIY video.)

Credit card debt doesn't have to be a given. And it certainly doesn't have to follow us to the grave.