How Severe Are Young People’s Debt Problems?
These days, financial struggles affect everyone, regardless of age, but certain financial problems are more prevalent in certain age groups. First, there are the seniors who are still struggling to make payments on Parent PLUS loans long after they have become eligible to draw Social Security. Members of the sandwich generation work night and day, supporting their elderly parents and trying to put their children in a better financial position than they themselves were in. Millennials, whether or not they borrowed money for college and are burdened by student loans, despair of ever being able to afford a home mortgage, since the cost of living is so high while wages are so low. The youngest participants in the labor market, however, have a unique set of challenges; consumers in their early 20s are especially vulnerable to rapid accumulations of debt that they will struggle to repay. If you are in the springtime of your life, but debt is threatening to follow you around until you reach a ripe old age, contact a Miami debt lawyer.
Consumer Credit Is More Expensive for People Without a Long Credit History
According to a recently published report by the Urban Institute, many young adults have a rough start to building their credit history. The authors of the report studied data from consumers between the ages of 18 and 24. Of the participants with an established credit history, 20 percent have at least one debt in collections.
Why are young people so vulnerable to being unable to repay their debts? According to Jessica Dickler of CNBC news, part of the reason is that young borrowers tend to have lower incomes, as they have less experience in the workforce. Likewise, those whose parents can afford to help them make payments on their loans are less likely to have their debts referred to collection agencies. Another part of the reason is that consumers’ credit scores affect the interest rates that lenders offer them, and the length of an applicant’s credit history is a factor in his or her credit score. Therefore, many young consumers can only get approved for credit cards with annual percentage rates (APR) as high as 30 percent, while more affordable credit cards are reserved for older and wealthier consumers.
Therefore, young people are especially vulnerable to high-risk credit options, as these are often the only types of credit that they can afford. People below the age of 30 make up a disproportionate share of participants in buy now pay later (BNPL) programs. These start out as interest-free installment plans, but since most of them do not require proof of ability to pay, participants can easily end up unable to keep up with the installment payments.
Contact a Debt Lawyer About Keeping Your Debt Manageable
A South Florida debt lawyer can help you get a fresh start with your debt if the credit options you have pursued are turning out to be unaffordable. Contact Nowack & Olson, PLLC in Miami, Florida to discuss your case.
Source:
cnbc.com/2022/12/21/1-in-5-young-adults-have-debt-in-collections-report-finds.html
