In the News

"The Plastic Safety Net: The Reality Behind Credit Card Debt in America" -- a report by the Center for Responsible Lending and the public policy organization Demos -- says credit card debt in America has almost tripled since 1989 and increased 31 percent since 2000.
 
"American families are facing financial hardship not experienced for generations, and we commissioned this survey to tell us precisely why they are turning to credit cards
so often," says Tamara Draut, director of the economic oppo
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"American families are facing financial hardship not experienced for generations, and we commissioned this survey to tell us precisely why they are turning to credit cards so often," said Tamara Draut, director of the Economic Opportunity Program at Demos, a nonpartisan, nonprofit public policy research and advocacy group based in New York.
 
"The Plastic Safety Net: The Reality Behind Debt in America" found that in low- and middle-income households, whites have the highest amount of credit card debt, over
The average credit card debt of low- and middle-income indebted households was $8,650, according to the study from Demos and the Center for Responsible Lending.
 
The more stringent law comes at a tough time for American consumers. A survey released last week showed that total credit card debt now stands at about $800 billion. That is up 31 percent since 2000
A new study about America's credit card debt from policy research and advocacy groups Demos, the Center for Responsible Lending, and the AARP shows that the most debt-troubled consumers are those who don't own their homes, even though their credit card balances are lower than those who are their own landlords ($6,880 vs. $10,296).
 
The fact that renters have a hard time dealing with debt than homeowners could be attributed to their having less disposable income -- a fact borne out in the survey results.
"The Plastic Safety Net," released Oct. 12 by policy research and advocacy groups Demos, the Center for Responsible Lending, and the AARP, reveals what's on our credit cards, why it's there, and what we're doing to manage our financial obligations.
 
The study found that most debt-strapped households use credit to cover unavoidable expenditures, not discretionary purchases. We're increasingly relying on plastic loans to pay our rents, mortgages, utilities, groceries, car repairs, and insurance premiums.
DEMOS, a New York-based public policy group that studies economic opportunity issues, and the Center for Responsible Lending, a Washington policy group focused on predatory lending, said low- and middle-income families fall into credit card debt to cope with income declines or unexpected costs.
 
According to the survey, 48 percent of respondents said they used credit cards to pay for car repairs while 38 percent reported paying for home repairs with plastic.
"The results are clear: wages have stagnated while medical and housing costs have skyrocketed, and if confronted with a layoff or health emergency there are few, if any, personal or public safety nets adequate enough to help in a crisis.
Today people are incurring a more dangerous kind of debt, says Tamara Draut, director of economic opportunity programs at Demos, a public policy organization in New York that's conducting a nationwide study of Americans and debt. "People are living paycheck to paycheck, and, after they've paid the bills, everything else -- like groceries or back-to-school clothes -- goes on the credit card," Draut says.
In 2002, more than 450,000 people over the age of 50 filed for bankruptcy, according to the Consumer Bankruptcy Project at Harvard University. For those who are trying to pay off their credit card debt, the latest report by the research firm, Demos, cites that one-fifth of seniors spend more than 40 percent of their income on debt payments alone
 
Soaring health costs, rising interest rates, unplanned expenses such as the death of a spouse, and now, rising gasoline prices, are affecting millions of seniors in the United States.

Eighteen- to 24-year-olds have an average $2,985 in credit card debt, according to last year's Demos USA study, "Generation Broke." The average plastic debt for 25- to 34-year-olds is $4,088.