American families are struggling in an increasingly volatile economy defined by job instability, continued layoffs in the guise of "downsizing", and declining employee benefits--factors augmented by new trends like outsourcing and unfettered trade. The result is a fragile alliance between workers and employers-- and families and the economy. At the same time that American households have become more vulnerable, our economic safety net has steadily eroded. Unemployment insurance benefits have declined, health insurance has been reduced or eliminated for many, public safety net programs have been de-funded and cannot meet demand, defined-benefit pensions have been replaced with an "at your own risk" retirement investments and, over the last decade, incomes have stagnated and can not keep pace with the rising costs of housing, health care and living expenses.
The tempestuous household economy and the rapid rise in debt over the last decade have been well-documented but not thoroughly understood. Existing data sources tracking debt, such as the Federal Reserve Board's triennial Survey of Consumer Finances, provide a limited picture of household indebtedness. Existing sources couldn't answer the simplest of questions, including how long the average household has been in debt and what types of purchases led to outstanding balances. Prior to the survey findings presented in The Plastic Safety Net, there has been no data available to study how households are using credit cards and how they are managing their debt.
The Plastic Safety Net presents findings from a national survey of households with credit card debt commissioned by Demos and the Center for Responsible Lending. The survey consisted of 1,150 phone interviews with low- and middle-income households whose incomes fell between 50 percent and 120 percent of local median income. In order to participate in the survey, a household had to have credit card debt for three months or longer at the time of the survey.