"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.
Washington, DC — American families are turning to credit cards to make ends meet in an increasingly volatile economy, according to The Plastic Safety Net: The Reality Behind Credit Card Debt in America, a new report released today by Demos and Center for Responsible Lending.
Washington, DC — On Wednesday, October 12, 2005 at the National Press Club in Washington DC, leading policy research and advocacy groups Demos, the Center for Responsible Lending and AARP will release findings from a new national survey of household debt in a report entitled The Plastic Safety Net: the Reality of Household Debt in America.
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.
People ages 45 to 59 are the most likely to refinance, according to Demos, a nonprofit public-policy organization in New York City.
The real estate bubble will eventually burst, says Cary Silvers, vice president of New York City--based GfK NOP, a market-research company that in 2004 gathered information on boomers' attitudes toward refinancing.
Javier Silva of Demos, a New York-based think tank, yesterday opposed any change. Raising the limit would extend a dangerous trend of loosening lending standards to enable consumers to buy homes they can't truly afford, Silva said. "The answer is to find ways to lower home prices, not simply raise debt limits to allow inflated prices to soar even higher," he said.
A proposal to reduce housing costs by relaxing federal lending limits in pricey real estate markets drew a mixture of praise and sharp criticism yesterday from real estate analysts.
Demos's senior research associate and author of A House of Cards: Refinancing the American Dream, Javier Silva, said that, even in the absence of a real estate crash, many families "are facing a financial crisis," partially because they've taken on more mortgage debt.
As more and more people have rushed to be homeowners, they actually own less of their homes than they have in decades...adding another risk factor to the overheated real estate market.
The study revealed some startling results that suggest a college education has become unaffordable to many young adults. For example, more students are taking on debt to finance their college education because of a shift in federal student aid programs. In 1980, the most common form of college funding was federal grants, which amounted to 52 percent of the government's student aid system. Loans followed at 45 percent. But by 2000, loans had risen to 58 percent of the student aid pie while grants dropped to 41 percent.
According to Demos, a New York-based research group, young Americans have the second-highest rate of bankruptcy - topped only by 35- to 44-year-olds. Demos says financial troubles often start when students leave college with credit card debt and student loans that already are unwieldy. According to Nellie Mae, graduates are leaving college with $20,500 in student loans and almost $2,864 in credit card debt.
Whether you want your child to get a credit card or not, he or she will probably get one. About 76 percent of students have them.
As Javier Silva, senior research associate at Demos, a research and advocacy group, explained: "Prices have gone up so high that a lot of people can't afford to get into the market - so lenders have responded with these products," he said, stressing the popular loan world euphemism.
Over the past decade, credit card debt among 18-24 year olds rose by 104 percent according to a report released by the nonprofit research organization Demos entitled "Generation Broke: The Growth of Debt Among Young Americans."
Although over a third of young adults own credit cards, young people receive little in the way of financial education.
Demos concludes that any meaningful attempt to explain the widening debt gap between Latino and African-American families and their white counterparts must take into account the larger social, cultural and economic forces driving credit card debt.
According to New York-based Demos, between 1998 and 2001, Latino households saw a 19% growth in credit card balances, African Americans stood at 10% and white households saw an 11% decrease.
New York, NY — African-American and Hispanic households are at greater financial risk and more likely to be in credit card debt than their white counterparts, according to a new report, Costly Credit: African Americans and Latinos in Debt, released today by the Economic Opportunity Program at Demos, a leading national, non-partisan public policy and advocacy group. The report analyzed and compared credit card debt and the forces driving credit card reliance in three ethnic/racial groups: African Americans, Hispanics and whites.
We live in an age when credit card debt has skyrocketed among young adults. It has risen 104 percent from 1992 to 2004 among 18- to 24-year-olds according to "Generation Broke: The Growth of Debt Among Young Americans," a report from Demos, a nonpartisan, nonprofit New York City-based research organization.
New York, NY / Washington, DC — Today, Demos: A Network for Ideas & Action, a national economic policy research organization, urges Congress to recognize the fragility of our debt-driven consumer economy when considering the bankruptcy "reform" bill (S. 256/H.R. 685) that has been passed by the Senate and is now under consideration in the House of Representatives. Short of opposing this dangerous legislation, the House should at least include amendments that will protect our nation's families from the most deleterious provisions.
NEW YORK — A new report released today, Home Insecurity: How Widespread Appraisal Fraud Puts Homeowners At Risk, reveals troubling evidence that many American homeowners and buyers are at financial risk from mortgage appraisal fraud. As a consequence, countless homeowners have borrowed more money than their homes are really worth. The report was conducted by Demos, a leading non-partisan, public policy group headquartered in New York City.
According to the consumer advocacy group Demos, from 1992 to 2001, the youngest adults (18 to 24 years old) saw the sharpest rise in credit-card debt-104 percent-to an average of $2,985. The second-highest increase-55 percent-was among young adults (25 to 34 years old), who also had the second highest bankruptcy rate, just after those ages 35 to 44.
According to the educational lender Nellie Mae, incoming college freshmen will amass $1,500 in credit-card debt before the end of their first term.
New York, NY and Washington, DC — Today, Demos: A Network for Ideas & Action, a national economic policy research organization, urges Congress to halt movement on the bankruptcy "reform" bill (S. 256 and H.R. 685) that will be introduced in the Senate on Monday, February 28, 2005. Congress must recognize of the fragility of our debt-driven consumer economy, and address the economic conditions that have brought about a household debt crisis in America.
New York, NY — Today, Demos: A Network for Ideas and Action announces the launch of its new Bankruptcy & Debt Clearinghouse (www.demos-usa.org/debt), an online information center containing key research, data points and analysis on trends in debt, bankruptcy and credit industry regulation in the United States.
