You may think that if you spend wisely you’ll be able to avoid huge amounts of credit card debt. But those who have this debt not only spend more frugally than those without it, they actually got into the debt in the first place because of hardships out of their control, not due to unwise budgeting, according to a report from the think tank Demos.
The report found that households with a family member who was unemployed for at least two months over the past three years are 14 percent more likely to be carrying credit card debt than those who escaped a brush with unemployment. A quarter of low- and middle-income families with credit card debt say that a layoff or job loss contributed to it, while 16 percent said it was the main cause. And it’s not just joblessness: nearly 40 percent of households with debt said that a family member had been trying to work full time at some point over the last three years but was only able to get part-time work, compared to just 22 percent of debt-free households who went through the same.