Last year, older borrowers held higher per-capita balances in every debt category except credit card debt, compared to 2003. Although they are less likely to revolve on their credit cards, those who do are more likely to carry a higher balance. There is a downside to this: Increased debt, combined with a continued hangover from the housing crisis and increasing healthcare expenditures, could result in an increased credit risk among baby boomers.
Boomers are buying more online
As boomers stay in the workplace longer, their spending habits also appear to be changing. For one, they’re making more purchases online via computers, smartphones and other devices, suggesting they are visiting traditional stores and using a physical card less frequently. These card-not-present (CNP) transactions now represent 40 percent of credit spending on Visa for consumers aged 60 to 69, which is only slightly lower than the overall average CNP of 40.3 percent.
Cards are used for varied purchases
Boomers are also buying different types of goods, requiring merchants and retailers to adapt as well. Fast food, a category where older consumers have traditionally held a small share of spending, is experiencing an increase in growth among boomers. Grocery, home goods and services (ranging from health care and insurance to taxis) are among the strongest categories.
The bottom line is, consumer spending is holding up despite slowing population and labor force growth, and baby boomers are the ones who deserve most of the credit.