Need Money? Here’s Why You Should Think Twice Before You Ask Grandma
It might be time to check in on grandma’s finances.
The CFPB’s monthly complaint report highlighted the most common problems reported by people ages 62 and older. This report breaks down the nearly 28,000 reports people in this age group filed in March to find trends.
Commonly reported financial problems included difficulties understanding changes to mortgage management, paying off credit card debt and accruing new debt, navigating banking services and recovering from scams.
The CFPB used information from people who voluntarily included their age when they filed their complaints. About 54% of those who file complaints include their age, the report said.
Debt Collection and Banking Fees Create Financial Stress
The greatest problem — accounting for nearly 9,000 of the 27,980 complaints filed in March — is debt collection.
According to the CFPB report, many people ages 62 and up said they rely on credit cards to cover unexpected expenses, like medical bills, that they can’t pay for with their fixed incomes.
The problem is often made worse when senior citizens don’t understand the terms and conditions of their new credit cards. The most detrimental misunderstanding is the difference between deferred interest and zero-interest cards.
“Months after charging these expenses, these consumers described being confused by the balances of their accounts,” the report found.
Adding to the financial stress, seniors tend to have more trouble keeping up with their finances when banks make changes to policies. For example, when banks no longer offer free paper statements or checks and encourage online banking, the change in banking routines can cause confusion.
Mortgage management is also a sore spot for many of the people ages 62 and up who reached out to the CFPB for help.
Those who are still paying off mortgages after retirement often struggle to pay off the last of the debt.
Many reported they didn’t understand changes after their mortgages were transferred to new lenders; others signed up for a reverse mortgage to cash in on the equity in their home without fully understanding the terms of the loan.
Those living on fixed incomes tend to be impacted most by the problems identified by the CFPB.
These financial problems only get worse if they go unchecked and in many cases only get noticed when someone else checks their finances.
Another Source of Stress for Seniors
Exacerbating the problems, a new study shows that Social Security benefits are not rising to keep up with the cost of expenses like health care premiums, prescription drugs and housing costs.
The Social Security study was conducted by the Senior Citizens League, a nonpartisan organization that works to protect the benefits and rights of senior citizens.
It found that the average Social Security benefit is about $1,320 per month, while recipients need $1,518 on average to afford basic expenses and maintain the buying power they had in 2000.
This is your cue to stop what you’re doing and call your grandmother. She will probably be happy to hear from you, and so will her bank account.
Desiree Stennett (@desi_stennett) is a staff writer at The Penny Hoarder.