SlideShare a Scribd company logo
1 of 2
Download to read offline
Dēmos Fact Sheet: CREDIT CARD DEBT


Preliminary Findings from Dēmos’ Low- to Middle-Income Household Survey, 2008
Credit card debt continues to threaten the nancial stability of many low- and middle-income families in the
United States, hampering their ability to save and move up the economic ladder. When shortfalls arise, credit has
been the only available safety net to help these families make ends meet . In this economic crisis, even though
America’s households took on less credit card debt in 2008 than the year before, high levels of revolving debt
from previous charges and compounding interest keep balances high and trap families in a vicious cycle.

As credit issuers begin to raise fees and penalties in 2009 to make up for losses in revenue elsewhere in the
banking industry, the impact on America’s households could be devastating.

Table 1. Characteristics of Households with Credit Card Debt
 Average amount of credit card debt                                                          $9,827
 Average number of credit cards held                                                              4
 Average credit card debt as a percent of annual income                                        24%

 % that have used a credit card to cover basic living expenses in the past year*               37%
 % that have used a credit card to pay for medical expenses past year?                         52%
 % of families that are paying o a credit card they have cancelled*                            35%
 % paying more than 20% APR*                                                                   25%
* Of households with credit card debt.
Source: 2008 Dēmos low- to middle-income household survey

To better understand the impact of credit card debt on a household’s nancial status, Dēmos created the “credit
card debt stress” ratio—that is, the ratio of a family’s outstanding credit card debt to their annual income.
Dēmos’ 2008 survey reveals that while credit cards fuel discretionary spending, many families commonly use
them to fund unavoidable expenses such as groceries, car repairs, and medical bills.

Which families have the highest levels of “credit card debt-stress” (credit card debt level as a percentage of
household annual income)?
     »    Families who use credit cards to cover basic expenses.
     »    Families dealing with a layo , car repairs or giving money to family to pay debt were more likely to have a
          higher relative debt-stress level.

Who has the most credit card debt?
     »    By age: The group with the greatest credit card debt in 2008 was 35-49 year olds with an average debt of
          $10,514. They were followed by older Americans 65 and up who experienced a 26 percent growth in credit
          card debt, carrying on average $10,235.
     »    By race/ethnicity: Hispanics had the highest level of credit card debt in 2008, carrying an average household
          debt of $10,002, compared to $9,775 in credit card debt for whites and $7,390 dollars for African Americans.

Communities of color have a disproportionate number of households facing high interest rates. While 1 in 4 low-
and middle-income households have annual percentage rates (APRs) of 20% or higher, nearly a third of African
Americans and Hispanics had APRs over 20% compared to less than one quarter (22%) of whites.
How do households pay o their credit card debt?
Dēmos asked families with credit card debt how they made their payments in the past year. More than half used
tax refunds.

Table 2. Methods Used to Pay Down Credit Card Debt
Tax refund                                                             59%
Worked extra hours/Got extra job                                       45%
Savings                                                                34%
Money from Earned Income Tax Credit                                    24%
Re nanced, 2nd mortgage or Home Equity Line of Credit                  19%
Money from a family member or friend                                   17%
Retirement funds                                                       16%
A loan from a bank                                                     11%
Source: 2008 Dēmos low- to middle-income household survey

In the midst of a recession, families are facing greater economic stress, making it harder to pay down credit card
debt. It is no surprise that delinquencies have grown. By the rst quarter of 2009, the percent of accounts 30 days
past due and still accruing interest rose to 6.5%—an all time high.


POLICY RECOMMENDATIONS
Promote Methods of Saving for emergency and future investments such as college and a down payment on a home.
Policies such as universal savings accounts and targeted tax credits to provide progressive matching are critical to
helping low- and middle-income households build savings to tap for unexpected and emergency expenses.

Reestablish a Social Contract that shares prosperity between employers and workers, provides access to a ordable
healthcare, rewards hard work, o ers good jobs, and provides a safety net for working families in hard times.

Create a Financial Product Safety Commission to set guidelines and require modi cations for nancial products such as
mortgages, credit cards, car and personal loans to ensure that these products do not pose unacceptable risks to
consumers.




                                      For more information, see www.demos.org
                                                 or contact José Garcia,
                                       Associate Director for Research and Policy
                                           Economic Opportunity Program
                                                    jgarcia@demos.org




                                  Dēmos Fact Sheet: CREDIT CARD DEBT

More Related Content

What's hot

Obama’S Mortgage Reduction Plan
Obama’S Mortgage Reduction PlanObama’S Mortgage Reduction Plan
Obama’S Mortgage Reduction PlanRE_Acquisitions
 
First regional benefits teaches financial survival skills
First regional benefits teaches financial survival skillsFirst regional benefits teaches financial survival skills
First regional benefits teaches financial survival skillsFirstRegionalBenefits
 
Payday Lending in TEXAS-Brief
Payday Lending in TEXAS-BriefPayday Lending in TEXAS-Brief
Payday Lending in TEXAS-BriefRama Gerig
 
FlexWage White Paper_Barth and Helm_November_28_2016
FlexWage White Paper_Barth and Helm_November_28_2016FlexWage White Paper_Barth and Helm_November_28_2016
FlexWage White Paper_Barth and Helm_November_28_2016Lauren Rich Granger
 
Latam and caribbean banks work to relieve pain of de risking - world - luigi ...
Latam and caribbean banks work to relieve pain of de risking - world - luigi ...Latam and caribbean banks work to relieve pain of de risking - world - luigi ...
Latam and caribbean banks work to relieve pain of de risking - world - luigi ...Luigi Wewege
 
U.S. Banks Still Lend Selectively Since the Great Recession
U.S. Banks Still Lend Selectively Since the Great RecessionU.S. Banks Still Lend Selectively Since the Great Recession
U.S. Banks Still Lend Selectively Since the Great RecessionMaxim Berger
 
Home Mortgage Disclosure Act Report
Home Mortgage Disclosure Act ReportHome Mortgage Disclosure Act Report
Home Mortgage Disclosure Act ReportCTUL
 
May 31st Town Hall Meeting
May 31st Town Hall MeetingMay 31st Town Hall Meeting
May 31st Town Hall Meetingacclwv
 
Don’t sign your life away, be wary of debt deals
Don’t sign your life away, be wary of debt deals Don’t sign your life away, be wary of debt deals
Don’t sign your life away, be wary of debt deals audreypatts
 
Childrens Hospices And The Recession 100129
Childrens Hospices And The Recession 100129Childrens Hospices And The Recession 100129
Childrens Hospices And The Recession 100129Karl Wilding
 
Top 5 Car Insurance Questions for Older Drivers
Top 5 Car Insurance Questions for Older DriversTop 5 Car Insurance Questions for Older Drivers
Top 5 Car Insurance Questions for Older Driversnutritiousallur57
 
ERISA Expert Advocates for 401(k) Loan Default Protection
ERISA Expert Advocates for 401(k) Loan Default ProtectionERISA Expert Advocates for 401(k) Loan Default Protection
ERISA Expert Advocates for 401(k) Loan Default ProtectionRetirement Loan Eraser
 
Credit and Bankruptcy
Credit and BankruptcyCredit and Bankruptcy
Credit and Bankruptcysbilliter
 
Practical Tips For Auto Title Loans Az
Practical Tips For Auto Title Loans AzPractical Tips For Auto Title Loans Az
Practical Tips For Auto Title Loans Azmajorjcyoung
 
Pandemic Impacts Americans’ Ability to Pay Bills
Pandemic Impacts Americans’ Ability to Pay BillsPandemic Impacts Americans’ Ability to Pay Bills
Pandemic Impacts Americans’ Ability to Pay BillsRebecca Gaskin Gain
 
Is FDIC Running Out of $?
Is FDIC Running Out of $?Is FDIC Running Out of $?
Is FDIC Running Out of $?guest904cb5
 
Mortgage Fraud: A Description and Community Research Results
Mortgage Fraud: A Description and Community Research ResultsMortgage Fraud: A Description and Community Research Results
Mortgage Fraud: A Description and Community Research ResultsAndy Carswell
 

What's hot (20)

Debt final
Debt finalDebt final
Debt final
 
Obama’S Mortgage Reduction Plan
Obama’S Mortgage Reduction PlanObama’S Mortgage Reduction Plan
Obama’S Mortgage Reduction Plan
 
First regional benefits teaches financial survival skills
First regional benefits teaches financial survival skillsFirst regional benefits teaches financial survival skills
First regional benefits teaches financial survival skills
 
Payday Lending in TEXAS-Brief
Payday Lending in TEXAS-BriefPayday Lending in TEXAS-Brief
Payday Lending in TEXAS-Brief
 
FlexWage White Paper_Barth and Helm_November_28_2016
FlexWage White Paper_Barth and Helm_November_28_2016FlexWage White Paper_Barth and Helm_November_28_2016
FlexWage White Paper_Barth and Helm_November_28_2016
 
Mitria Wilson | Americans Underwater
Mitria Wilson | Americans UnderwaterMitria Wilson | Americans Underwater
Mitria Wilson | Americans Underwater
 
Latam and caribbean banks work to relieve pain of de risking - world - luigi ...
Latam and caribbean banks work to relieve pain of de risking - world - luigi ...Latam and caribbean banks work to relieve pain of de risking - world - luigi ...
Latam and caribbean banks work to relieve pain of de risking - world - luigi ...
 
U.S. Banks Still Lend Selectively Since the Great Recession
U.S. Banks Still Lend Selectively Since the Great RecessionU.S. Banks Still Lend Selectively Since the Great Recession
U.S. Banks Still Lend Selectively Since the Great Recession
 
Home Mortgage Disclosure Act Report
Home Mortgage Disclosure Act ReportHome Mortgage Disclosure Act Report
Home Mortgage Disclosure Act Report
 
The Retirement Crisis
The Retirement CrisisThe Retirement Crisis
The Retirement Crisis
 
May 31st Town Hall Meeting
May 31st Town Hall MeetingMay 31st Town Hall Meeting
May 31st Town Hall Meeting
 
Don’t sign your life away, be wary of debt deals
Don’t sign your life away, be wary of debt deals Don’t sign your life away, be wary of debt deals
Don’t sign your life away, be wary of debt deals
 
Childrens Hospices And The Recession 100129
Childrens Hospices And The Recession 100129Childrens Hospices And The Recession 100129
Childrens Hospices And The Recession 100129
 
Top 5 Car Insurance Questions for Older Drivers
Top 5 Car Insurance Questions for Older DriversTop 5 Car Insurance Questions for Older Drivers
Top 5 Car Insurance Questions for Older Drivers
 
ERISA Expert Advocates for 401(k) Loan Default Protection
ERISA Expert Advocates for 401(k) Loan Default ProtectionERISA Expert Advocates for 401(k) Loan Default Protection
ERISA Expert Advocates for 401(k) Loan Default Protection
 
Credit and Bankruptcy
Credit and BankruptcyCredit and Bankruptcy
Credit and Bankruptcy
 
Practical Tips For Auto Title Loans Az
Practical Tips For Auto Title Loans AzPractical Tips For Auto Title Loans Az
Practical Tips For Auto Title Loans Az
 
Pandemic Impacts Americans’ Ability to Pay Bills
Pandemic Impacts Americans’ Ability to Pay BillsPandemic Impacts Americans’ Ability to Pay Bills
Pandemic Impacts Americans’ Ability to Pay Bills
 
Is FDIC Running Out of $?
Is FDIC Running Out of $?Is FDIC Running Out of $?
Is FDIC Running Out of $?
 
Mortgage Fraud: A Description and Community Research Results
Mortgage Fraud: A Description and Community Research ResultsMortgage Fraud: A Description and Community Research Results
Mortgage Fraud: A Description and Community Research Results
 

Viewers also liked

Biomass conversion for energy
Biomass conversion  for energyBiomass conversion  for energy
Biomass conversion for energyH Janardan Prabhu
 
Biomass Power Point
Biomass Power PointBiomass Power Point
Biomass Power Pointguestcc80f8
 
BIOMASS as renewable energy resource
BIOMASS as renewable energy resourceBIOMASS as renewable energy resource
BIOMASS as renewable energy resourceUzair Khan
 
Biomass energy ppt
Biomass energy pptBiomass energy ppt
Biomass energy pptSann Jana
 
Renewable Energy Resourses
Renewable Energy ResoursesRenewable Energy Resourses
Renewable Energy Resoursesshalini2093
 
Renewable Energy Sources
Renewable Energy SourcesRenewable Energy Sources
Renewable Energy SourcesStoyan Dimitrov
 

Viewers also liked (8)

Emmalee
EmmaleeEmmalee
Emmalee
 
Biomass conversion for energy
Biomass conversion  for energyBiomass conversion  for energy
Biomass conversion for energy
 
Biomass
BiomassBiomass
Biomass
 
Biomass Power Point
Biomass Power PointBiomass Power Point
Biomass Power Point
 
BIOMASS as renewable energy resource
BIOMASS as renewable energy resourceBIOMASS as renewable energy resource
BIOMASS as renewable energy resource
 
Biomass energy ppt
Biomass energy pptBiomass energy ppt
Biomass energy ppt
 
Renewable Energy Resourses
Renewable Energy ResoursesRenewable Energy Resourses
Renewable Energy Resourses
 
Renewable Energy Sources
Renewable Energy SourcesRenewable Energy Sources
Renewable Energy Sources
 

Similar to Credit Card Debt: Preliminary Findings from Demos' Low- to Middle-Income Household Survey, 2008

Poverty chapter 10
Poverty chapter 10Poverty chapter 10
Poverty chapter 10Ray Brannon
 
Beth Tfiloh HS: Financial Literacy Presentation
Beth Tfiloh HS: Financial Literacy PresentationBeth Tfiloh HS: Financial Literacy Presentation
Beth Tfiloh HS: Financial Literacy PresentationRina Schiff Goloskov
 
The State of Lending in America & its Impact on U.S. Households
The State of Lending in America & its Impact on U.S. HouseholdsThe State of Lending in America & its Impact on U.S. Households
The State of Lending in America & its Impact on U.S. HouseholdsCenter for Responsible Lending
 
Poverty chapter 10
Poverty chapter 10Poverty chapter 10
Poverty chapter 10Ray Brannon
 
Building Generational Wealth & Venture Capital
Building Generational Wealth & Venture CapitalBuilding Generational Wealth & Venture Capital
Building Generational Wealth & Venture CapitalJamesAppiahPippim1
 
Debt Threat: The National Debt and You
Debt Threat: The National Debt and You Debt Threat: The National Debt and You
Debt Threat: The National Debt and You Fix the Debt Campaign
 
Fed Reserve Study 2006
Fed Reserve Study 2006Fed Reserve Study 2006
Fed Reserve Study 2006strivere
 
Why the ballooning student debt should be on your radar
Why the ballooning student debt should be on your radarWhy the ballooning student debt should be on your radar
Why the ballooning student debt should be on your radargloriasimmon
 
The Worst Of Economic Times In The Great Recession
The Worst Of Economic Times In The Great RecessionThe Worst Of Economic Times In The Great Recession
The Worst Of Economic Times In The Great RecessionKrystal Ellison
 
Pay Day Research Paper
Pay Day Research PaperPay Day Research Paper
Pay Day Research PaperLiz Sims
 
REAL Solutions_Foreclosures in America_2009
REAL Solutions_Foreclosures in America_2009REAL Solutions_Foreclosures in America_2009
REAL Solutions_Foreclosures in America_2009realsolutions
 
The Pros And Cons Of Mortgage And Brokers
The Pros And Cons Of Mortgage And BrokersThe Pros And Cons Of Mortgage And Brokers
The Pros And Cons Of Mortgage And BrokersTina Jordan
 
Reverse Mortgage Essay
Reverse Mortgage EssayReverse Mortgage Essay
Reverse Mortgage EssayBeth Johnson
 
FACT SHEET: Medical Debt
FACT SHEET: Medical DebtFACT SHEET: Medical Debt
FACT SHEET: Medical Debtcoryhelene
 

Similar to Credit Card Debt: Preliminary Findings from Demos' Low- to Middle-Income Household Survey, 2008 (20)

Poverty chapter 10
Poverty chapter 10Poverty chapter 10
Poverty chapter 10
 
Beth Tfiloh HS: Financial Literacy Presentation
Beth Tfiloh HS: Financial Literacy PresentationBeth Tfiloh HS: Financial Literacy Presentation
Beth Tfiloh HS: Financial Literacy Presentation
 
The State of Lending in America & its Impact on U.S. Households
The State of Lending in America & its Impact on U.S. HouseholdsThe State of Lending in America & its Impact on U.S. Households
The State of Lending in America & its Impact on U.S. Households
 
Cdl conference finance presentation v.final
Cdl conference finance presentation v.finalCdl conference finance presentation v.final
Cdl conference finance presentation v.final
 
Consumer Debt
Consumer DebtConsumer Debt
Consumer Debt
 
Poverty chapter 10
Poverty chapter 10Poverty chapter 10
Poverty chapter 10
 
Emerge ing
Emerge ingEmerge ing
Emerge ing
 
Building Generational Wealth & Venture Capital
Building Generational Wealth & Venture CapitalBuilding Generational Wealth & Venture Capital
Building Generational Wealth & Venture Capital
 
The New Face of LMI Lending
The New Face of LMI Lending The New Face of LMI Lending
The New Face of LMI Lending
 
Debt Threat: The National Debt and You
Debt Threat: The National Debt and You Debt Threat: The National Debt and You
Debt Threat: The National Debt and You
 
Fed Reserve Study 2006
Fed Reserve Study 2006Fed Reserve Study 2006
Fed Reserve Study 2006
 
Why the ballooning student debt should be on your radar
Why the ballooning student debt should be on your radarWhy the ballooning student debt should be on your radar
Why the ballooning student debt should be on your radar
 
Top Financial Sector Trends
Top Financial Sector TrendsTop Financial Sector Trends
Top Financial Sector Trends
 
The Worst Of Economic Times In The Great Recession
The Worst Of Economic Times In The Great RecessionThe Worst Of Economic Times In The Great Recession
The Worst Of Economic Times In The Great Recession
 
Pay Day Research Paper
Pay Day Research PaperPay Day Research Paper
Pay Day Research Paper
 
REAL Solutions_Foreclosures in America_2009
REAL Solutions_Foreclosures in America_2009REAL Solutions_Foreclosures in America_2009
REAL Solutions_Foreclosures in America_2009
 
The Pros And Cons Of Mortgage And Brokers
The Pros And Cons Of Mortgage And BrokersThe Pros And Cons Of Mortgage And Brokers
The Pros And Cons Of Mortgage And Brokers
 
Reverse Mortgage Essay
Reverse Mortgage EssayReverse Mortgage Essay
Reverse Mortgage Essay
 
Lower My Mortage
Lower My MortageLower My Mortage
Lower My Mortage
 
FACT SHEET: Medical Debt
FACT SHEET: Medical DebtFACT SHEET: Medical Debt
FACT SHEET: Medical Debt
 

More from coryhelene

America's fiscal choices_10_4
America's fiscal choices_10_4America's fiscal choices_10_4
America's fiscal choices_10_4coryhelene
 
Student Debt 101
Student Debt 101Student Debt 101
Student Debt 101coryhelene
 
National Voter Registration Act: A Fact Sheet
National Voter Registration Act: A Fact SheetNational Voter Registration Act: A Fact Sheet
National Voter Registration Act: A Fact Sheetcoryhelene
 
Broken Buffer: How Trade Adjustment Assistance Fails American Workers
Broken Buffer: How Trade Adjustment Assistance Fails American WorkersBroken Buffer: How Trade Adjustment Assistance Fails American Workers
Broken Buffer: How Trade Adjustment Assistance Fails American Workerscoryhelene
 
Same Day Voter Registration in Maryland
Same Day Voter Registration in MarylandSame Day Voter Registration in Maryland
Same Day Voter Registration in Marylandcoryhelene
 
Public Assistance Databases and Automatic Voter Registration
Public Assistance Databases and Automatic Voter RegistrationPublic Assistance Databases and Automatic Voter Registration
Public Assistance Databases and Automatic Voter Registrationcoryhelene
 
Public Assistance Databases and Automatic Voter Registration
Public Assistance Databases and Automatic Voter RegistrationPublic Assistance Databases and Automatic Voter Registration
Public Assistance Databases and Automatic Voter Registrationcoryhelene
 
A Dilution of Democracy: Prison-Based Gerrymandering
A Dilution of Democracy: Prison-Based GerrymanderingA Dilution of Democracy: Prison-Based Gerrymandering
A Dilution of Democracy: Prison-Based Gerrymanderingcoryhelene
 
Bigger Banks, Riskier Banks
Bigger Banks, Riskier BanksBigger Banks, Riskier Banks
Bigger Banks, Riskier Bankscoryhelene
 
U.N. Beijing + 15 Conference and the 30% Solution
U.N. Beijing + 15 Conference and the 30% SolutionU.N. Beijing + 15 Conference and the 30% Solution
U.N. Beijing + 15 Conference and the 30% Solutioncoryhelene
 
Voters Win with Same Day Registration
Voters Win with Same Day RegistrationVoters Win with Same Day Registration
Voters Win with Same Day Registrationcoryhelene
 
Election Day Voter Registration in New Mexico
Election Day Voter Registration in New MexicoElection Day Voter Registration in New Mexico
Election Day Voter Registration in New Mexicocoryhelene
 
People v. Cady: A Fact Sheet
People v. Cady: A Fact SheetPeople v. Cady: A Fact Sheet
People v. Cady: A Fact Sheetcoryhelene
 
Paving The Way
Paving The WayPaving The Way
Paving The Waycoryhelene
 
FACT SHEET: Consumer Financial Protection Agency
FACT SHEET: Consumer Financial Protection AgencyFACT SHEET: Consumer Financial Protection Agency
FACT SHEET: Consumer Financial Protection Agencycoryhelene
 
Reforming Rating Agencies
Reforming Rating AgenciesReforming Rating Agencies
Reforming Rating Agenciescoryhelene
 
Six Principles for True Systemic Risk Reform
Six Principles for True Systemic Risk ReformSix Principles for True Systemic Risk Reform
Six Principles for True Systemic Risk Reformcoryhelene
 
Government, The Economy and We, The People
Government, The Economy and We, The PeopleGovernment, The Economy and We, The People
Government, The Economy and We, The Peoplecoryhelene
 
Promoting Broad Prosperity
Promoting Broad ProsperityPromoting Broad Prosperity
Promoting Broad Prosperitycoryhelene
 
The Squeeze Is On
The Squeeze Is OnThe Squeeze Is On
The Squeeze Is Oncoryhelene
 

More from coryhelene (20)

America's fiscal choices_10_4
America's fiscal choices_10_4America's fiscal choices_10_4
America's fiscal choices_10_4
 
Student Debt 101
Student Debt 101Student Debt 101
Student Debt 101
 
National Voter Registration Act: A Fact Sheet
National Voter Registration Act: A Fact SheetNational Voter Registration Act: A Fact Sheet
National Voter Registration Act: A Fact Sheet
 
Broken Buffer: How Trade Adjustment Assistance Fails American Workers
Broken Buffer: How Trade Adjustment Assistance Fails American WorkersBroken Buffer: How Trade Adjustment Assistance Fails American Workers
Broken Buffer: How Trade Adjustment Assistance Fails American Workers
 
Same Day Voter Registration in Maryland
Same Day Voter Registration in MarylandSame Day Voter Registration in Maryland
Same Day Voter Registration in Maryland
 
Public Assistance Databases and Automatic Voter Registration
Public Assistance Databases and Automatic Voter RegistrationPublic Assistance Databases and Automatic Voter Registration
Public Assistance Databases and Automatic Voter Registration
 
Public Assistance Databases and Automatic Voter Registration
Public Assistance Databases and Automatic Voter RegistrationPublic Assistance Databases and Automatic Voter Registration
Public Assistance Databases and Automatic Voter Registration
 
A Dilution of Democracy: Prison-Based Gerrymandering
A Dilution of Democracy: Prison-Based GerrymanderingA Dilution of Democracy: Prison-Based Gerrymandering
A Dilution of Democracy: Prison-Based Gerrymandering
 
Bigger Banks, Riskier Banks
Bigger Banks, Riskier BanksBigger Banks, Riskier Banks
Bigger Banks, Riskier Banks
 
U.N. Beijing + 15 Conference and the 30% Solution
U.N. Beijing + 15 Conference and the 30% SolutionU.N. Beijing + 15 Conference and the 30% Solution
U.N. Beijing + 15 Conference and the 30% Solution
 
Voters Win with Same Day Registration
Voters Win with Same Day RegistrationVoters Win with Same Day Registration
Voters Win with Same Day Registration
 
Election Day Voter Registration in New Mexico
Election Day Voter Registration in New MexicoElection Day Voter Registration in New Mexico
Election Day Voter Registration in New Mexico
 
People v. Cady: A Fact Sheet
People v. Cady: A Fact SheetPeople v. Cady: A Fact Sheet
People v. Cady: A Fact Sheet
 
Paving The Way
Paving The WayPaving The Way
Paving The Way
 
FACT SHEET: Consumer Financial Protection Agency
FACT SHEET: Consumer Financial Protection AgencyFACT SHEET: Consumer Financial Protection Agency
FACT SHEET: Consumer Financial Protection Agency
 
Reforming Rating Agencies
Reforming Rating AgenciesReforming Rating Agencies
Reforming Rating Agencies
 
Six Principles for True Systemic Risk Reform
Six Principles for True Systemic Risk ReformSix Principles for True Systemic Risk Reform
Six Principles for True Systemic Risk Reform
 
Government, The Economy and We, The People
Government, The Economy and We, The PeopleGovernment, The Economy and We, The People
Government, The Economy and We, The People
 
Promoting Broad Prosperity
Promoting Broad ProsperityPromoting Broad Prosperity
Promoting Broad Prosperity
 
The Squeeze Is On
The Squeeze Is OnThe Squeeze Is On
The Squeeze Is On
 

Recently uploaded

Another Day, Another Default Judgment Against Gabe Whitley
Another Day, Another Default Judgment Against Gabe WhitleyAnother Day, Another Default Judgment Against Gabe Whitley
Another Day, Another Default Judgment Against Gabe WhitleyAbdul-Hakim Shabazz
 
One India vs United India by Dream Tamilnadu
One India vs United India by Dream TamilnaduOne India vs United India by Dream Tamilnadu
One India vs United India by Dream TamilnaduDreamTamilnadu
 
Por estos dos motivos, defensa de JOH solicita repetir juicio
Por estos dos motivos, defensa de JOH solicita repetir juicioPor estos dos motivos, defensa de JOH solicita repetir juicio
Por estos dos motivos, defensa de JOH solicita repetir juicioAlexisTorres963861
 
Light Rail in Canberra: Too much, too little, too late: Is the price worth th...
Light Rail in Canberra: Too much, too little, too late: Is the price worth th...Light Rail in Canberra: Too much, too little, too late: Is the price worth th...
Light Rail in Canberra: Too much, too little, too late: Is the price worth th...University of Canberra
 
Ministry of Justice Extradition Eswatini 3.pdf
Ministry of Justice Extradition Eswatini 3.pdfMinistry of Justice Extradition Eswatini 3.pdf
Ministry of Justice Extradition Eswatini 3.pdfSABC News
 
Anantkumar Hegde
Anantkumar Hegde  Anantkumar Hegde
Anantkumar Hegde NewsFeed1
 
Européennes 2024 : projection du Parlement européen à trois mois du scrutin
Européennes 2024 : projection du Parlement européen à trois mois du scrutinEuropéennes 2024 : projection du Parlement européen à trois mois du scrutin
Européennes 2024 : projection du Parlement européen à trois mois du scrutinIpsos France
 
19032024_First India Newspaper Jaipur.pdf
19032024_First India Newspaper Jaipur.pdf19032024_First India Newspaper Jaipur.pdf
19032024_First India Newspaper Jaipur.pdfFIRST INDIA
 

Recently uploaded (8)

Another Day, Another Default Judgment Against Gabe Whitley
Another Day, Another Default Judgment Against Gabe WhitleyAnother Day, Another Default Judgment Against Gabe Whitley
Another Day, Another Default Judgment Against Gabe Whitley
 
One India vs United India by Dream Tamilnadu
One India vs United India by Dream TamilnaduOne India vs United India by Dream Tamilnadu
One India vs United India by Dream Tamilnadu
 
Por estos dos motivos, defensa de JOH solicita repetir juicio
Por estos dos motivos, defensa de JOH solicita repetir juicioPor estos dos motivos, defensa de JOH solicita repetir juicio
Por estos dos motivos, defensa de JOH solicita repetir juicio
 
Light Rail in Canberra: Too much, too little, too late: Is the price worth th...
Light Rail in Canberra: Too much, too little, too late: Is the price worth th...Light Rail in Canberra: Too much, too little, too late: Is the price worth th...
Light Rail in Canberra: Too much, too little, too late: Is the price worth th...
 
Ministry of Justice Extradition Eswatini 3.pdf
Ministry of Justice Extradition Eswatini 3.pdfMinistry of Justice Extradition Eswatini 3.pdf
Ministry of Justice Extradition Eswatini 3.pdf
 
Anantkumar Hegde
Anantkumar Hegde  Anantkumar Hegde
Anantkumar Hegde
 
Européennes 2024 : projection du Parlement européen à trois mois du scrutin
Européennes 2024 : projection du Parlement européen à trois mois du scrutinEuropéennes 2024 : projection du Parlement européen à trois mois du scrutin
Européennes 2024 : projection du Parlement européen à trois mois du scrutin
 
19032024_First India Newspaper Jaipur.pdf
19032024_First India Newspaper Jaipur.pdf19032024_First India Newspaper Jaipur.pdf
19032024_First India Newspaper Jaipur.pdf
 

Credit Card Debt: Preliminary Findings from Demos' Low- to Middle-Income Household Survey, 2008

  • 1. Dēmos Fact Sheet: CREDIT CARD DEBT Preliminary Findings from Dēmos’ Low- to Middle-Income Household Survey, 2008 Credit card debt continues to threaten the nancial stability of many low- and middle-income families in the United States, hampering their ability to save and move up the economic ladder. When shortfalls arise, credit has been the only available safety net to help these families make ends meet . In this economic crisis, even though America’s households took on less credit card debt in 2008 than the year before, high levels of revolving debt from previous charges and compounding interest keep balances high and trap families in a vicious cycle. As credit issuers begin to raise fees and penalties in 2009 to make up for losses in revenue elsewhere in the banking industry, the impact on America’s households could be devastating. Table 1. Characteristics of Households with Credit Card Debt Average amount of credit card debt $9,827 Average number of credit cards held 4 Average credit card debt as a percent of annual income 24% % that have used a credit card to cover basic living expenses in the past year* 37% % that have used a credit card to pay for medical expenses past year? 52% % of families that are paying o a credit card they have cancelled* 35% % paying more than 20% APR* 25% * Of households with credit card debt. Source: 2008 Dēmos low- to middle-income household survey To better understand the impact of credit card debt on a household’s nancial status, Dēmos created the “credit card debt stress” ratio—that is, the ratio of a family’s outstanding credit card debt to their annual income. Dēmos’ 2008 survey reveals that while credit cards fuel discretionary spending, many families commonly use them to fund unavoidable expenses such as groceries, car repairs, and medical bills. Which families have the highest levels of “credit card debt-stress” (credit card debt level as a percentage of household annual income)? » Families who use credit cards to cover basic expenses. » Families dealing with a layo , car repairs or giving money to family to pay debt were more likely to have a higher relative debt-stress level. Who has the most credit card debt? » By age: The group with the greatest credit card debt in 2008 was 35-49 year olds with an average debt of $10,514. They were followed by older Americans 65 and up who experienced a 26 percent growth in credit card debt, carrying on average $10,235. » By race/ethnicity: Hispanics had the highest level of credit card debt in 2008, carrying an average household debt of $10,002, compared to $9,775 in credit card debt for whites and $7,390 dollars for African Americans. Communities of color have a disproportionate number of households facing high interest rates. While 1 in 4 low- and middle-income households have annual percentage rates (APRs) of 20% or higher, nearly a third of African Americans and Hispanics had APRs over 20% compared to less than one quarter (22%) of whites.
  • 2. How do households pay o their credit card debt? Dēmos asked families with credit card debt how they made their payments in the past year. More than half used tax refunds. Table 2. Methods Used to Pay Down Credit Card Debt Tax refund 59% Worked extra hours/Got extra job 45% Savings 34% Money from Earned Income Tax Credit 24% Re nanced, 2nd mortgage or Home Equity Line of Credit 19% Money from a family member or friend 17% Retirement funds 16% A loan from a bank 11% Source: 2008 Dēmos low- to middle-income household survey In the midst of a recession, families are facing greater economic stress, making it harder to pay down credit card debt. It is no surprise that delinquencies have grown. By the rst quarter of 2009, the percent of accounts 30 days past due and still accruing interest rose to 6.5%—an all time high. POLICY RECOMMENDATIONS Promote Methods of Saving for emergency and future investments such as college and a down payment on a home. Policies such as universal savings accounts and targeted tax credits to provide progressive matching are critical to helping low- and middle-income households build savings to tap for unexpected and emergency expenses. Reestablish a Social Contract that shares prosperity between employers and workers, provides access to a ordable healthcare, rewards hard work, o ers good jobs, and provides a safety net for working families in hard times. Create a Financial Product Safety Commission to set guidelines and require modi cations for nancial products such as mortgages, credit cards, car and personal loans to ensure that these products do not pose unacceptable risks to consumers. For more information, see www.demos.org or contact José Garcia, Associate Director for Research and Policy Economic Opportunity Program jgarcia@demos.org Dēmos Fact Sheet: CREDIT CARD DEBT