Americans use credit cards millions of times every day. The convenience and utility of revolving credit has become a way of life for most families. However for some, it has also become a lifeline. This report, based on Demos’ 2008 national household survey of low- and middle-income households, compares households who had revolving balances on their credit cards for three months or more with households that did not carry credit card debt.
This report finds that families with credit card debt are more likely to have experienced economic shocks such as unemployment, a loss of health insurance or an unexpected medical expense. They also have fewer assets and are more likely than non-indebted families to have other monthly financial obligations in addition to credit cards. Many indebted families compensate for their lack of assets by using credit cards to meet basic expenses when an unforeseen crisis hits. This reliance on revolving credit further increases a family’s economic vulnerability and likelihood to need to rely on credit cards in the future.


• Working-age indebted families were more likely than non-indebted families of working age to be unemployed for at least two months in the last three years: thirty seven percent of indebted families suffered from unemployment in this time frame versus 22 percent of non-indebted households.

• Forty-four percent of indebted households (versus 36 percent of non-indebted households) faced a major medical expense in the last three years.

• Non-indebted households are more likely to be homeowners than indebted households. And among those who were homeowners with equity, credit card indebted households have 54 percent less home equity than non-credit card indebted households.

• The total value of financial as­sets such as a checking and savings accounts, CDs, stocks, pension plans, and IRAs was 11 percent lower in the indebted households than in households without revolving credit card debt.

• The average value of a non-indebted household’s checking and saving accounts was $4,348. For non-indebted households the value of these as­sets was $9,845 – more than double.