3433-vol. 6 issue 2-3.pmd - iarfc

102
Journal of Personal Finance
such as flexible interest rates, late fees, over the limit charges, and the
possibility that a poor payment history on one card can trigger increased
finance charges on others.
The higher levels of confidence and lower levels of worry among
older adults might make interventions difficult. The first step with this group
is to raise awareness that mounting debt can become a problem with consequences
that might prevent them from attaining other important goals. A
second step is to help them understand the reasons behind their use of
consumer credit. For some clients, health concerns and the need for expensive
medications, health care, or insurance payments may be driving the use
of credit. Others have real or perceived expectations for the care of their aging
parents or their adult children and grandchildren. In some cases, poor
communication or uncomfortable or even hostile interactions with a partner or
family member about money and debt may stand in the way of developing
effective strategies for reducing credit card debt. An analysis of these
demands on income and interpersonal challenges may lead to identification of
other resources or new strategies for reducing debt.
A third step is to educate the client about the credit card system and
“smart” consumer behaviors such as calling the credit card company to ask
for a lower interest rate, reviewing the costs associated with late payments,
selecting credit cards with the most favorable features, and analyzing the
factors that result in a poor credit score. Once an older client realizes that
paying for something using a credit card actually costs much more if the
balance is not paid in full each month than paying by cash, he or she may be
more motivated to reduce credit card spending. Understanding how aspects
of the credit system impact their debt might mobilize older adults toward
problem-focused coping. Once older adults understand the credit system and
the “rules of the game” they may be more likely to want to take action and to
be successful. They are more likely to view their debt as a manageable
problem, their willingness to seek help in solving the problem may increase,
and their existing high level of confidence can be a resource to help them
succeed in getting out of debt.
Acknowledgements
The authors would like to thank Janice M. Prochaska, Ph.D. and
Janet J. Johnson, Ph.D., of Pro-Change Behavior Systems, and Berta Leon and
Robert L. Bassett, Research Assistants in the Department of Human Development
& Family Studies, University of Rhode Island for their contributions to
the larger research project and related publications.
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