About a hundred local seniors turned out at the Halfmoon Senior Center for a field hearing by the U.S. House Subcommittee on Financial Institutions and Consumer Credit on Tuesday, Aug 7.
The topic was credit cards and older Americans.
U.S. Rep. Kirsten Gillibrand, D-Hudson, asked the subcommittee’s chairwoman, U.S. Rep. Carolyn Maloney, D-Manhattan, to hold a local hearing after learning the topic was of concern to area residents.
Among the suggestions made at the hearing were improved disclosure of interest rates and penalties by credit card companies, improved financial literacy among seniors, and encouraging seniors to use debit cards instead of credit cards.
Credit cards play an important role in the lives of many Americans by offering convenience and financial security in unforeseeable situations, Gillibrand said. `However, I’m concerned that too many seniors, who after decades of hard work and service to this country, are drowning in unaffordable debt.`
Five witnesses testified at the hearing, including Robert O’Connell, Executive Council with AARP New York.
`While credit card companies have every right to earn a profit, AARP is concerned that the consumers in the marketplace be treated fairly and that credit card companies not reap huge financial rewards from the very practices that sink customers deeper and deeper into debt,` he said.
O’Connell cited a report, `Retiring in the Red,` by Demos, a non-partisan think tank in New York.
The report said that the average self-reported credit card debt among seniors increased by 89 percent from 1992 to 2001 to over $4,000, and that seniors between 65 and 69 years old saw an increase in total credit card debt of 217 percent in that time period.
`Unfortunately, what the data suggests is that many older Americans use credit cards as a plastic safety net to make essential purchases they cannot otherwise afford, including out-of-pocket medical expenses, energy and utility bills, and rising property taxes,` Maloney said.
Another witness, Barbara Whipple, an associate attorney with Barbaruolo Law Firm in Latham, said she practices primarily in the area of consumer bankruptcy. She recalled a 70-year-old client with a $1,400 monthly credit card bill who came to her office seeking help.
`I said to her, ‘You need to retire,’` Whipple said. `’I can absolutely not afford to do that’, she said. ‘Barb, I have convinced myself that I will be working until I die.’`
After the hearing, Gillibrand thanked Halfmoon supervisor Mindy Wormuth and councilwoman Regina Parker for attending. She also responded to Whipple’s story.
`I think it’s terrible, and I think that these credit card companies taking advantage of our senior citizens is something that has to stop,` Gillibrand said. `I think Congress is going to work hard through the financial services committee to come up with some recommendations.`
David Billet, who also testified at the hearing, is the Director of Legislation and Government Affairs with the state banking department.
`States have essentially no authority to apply their consumer protection laws to the activities of the nation’s largest credit card issuers,` Billet said. `The only option is for the federal government to adopt national standards to address credit card problems on a nationwide basis, which would then protect all citizens in all states.`
Halfmoon senior David Pohl said that fixed budgets and soaring health-care costs were the reasons for increased debt among seniors.
`People like us and older are not out there buying $50,000 cars, TVs, refrigerators or expensive items,` Pohl said. `We’re using it for health care problems that come up. That’s the reason for the spike on older peoples’ credit card problems.`
`When your prescription goes up from $42 a month to $82 a month, that’s a big impact on people just living on social security,` he added. `[Either] they don’t get it and they’re going to die in a year, or they go into debt.`
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