Credit Card Debt Preys on Middle and Low Income Households According to New Survey
By Mike Killian, CardRatings.com Credit/Debt Management Reporter
You don't have to go too much further than the most recent news article to learn of our volatile economy and its impact on consumers. Increased fuel costs are simply the most recent tip of the iceberg. And like an iceberg, the vast majority of the problems and their potential dangers lay beneath the surface.
A new report called The Plastic Safety Net offers findings from a national survey of households with credit card debt. The report was commissioned by Demos (a non-profit, non-partisan public policy organization) 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."
I spoke with the co-author of the report, Tamara Draut, Director of the Economic Opportunity Program at Demos. Tamara oversees Demos' research, policy and advocacy work on economic security issues and has authored numerous other reports, books, and notable works. According to Tamara,
The findings of the study are disturbing. 70% of low and middle income households reported using their credit cards as a safety net. 20% had paid off some credit card debt with a mortgage refinance in the last three years, reducing their home equity to $12,000 on average. Yet, these same households still had average credit card debt over $14,000! 47% of households had been called by a bill collector. 33% reported using credit cards to cover basic living expenses and did so an average of four out of the last 12 months.
The full report offers even more startling findings, but Tamara was very adamant to point out,
We welcome your comments about credit card debt in our popular credit forum!
Mike Killian has been writing about credit and debt management issues that are of importance to consumers for over 8 years. He formerly served as the Guide to About's credit site, which was recognized by Forbes Magazine's "Best of the Web" for 5 of the last 6 years. Mike has also offered debt elimination seminars to businesses and community colleges for many years.
Mike offers free consumer advice on the CardRatings.com Credit Forum as well as on his own site, FreeMoneyTraining.com. While at his site, you can view additional articles as well as his schedule of upcoming seminars.
CardRatings.com is the most comprehensive source for comparing credit card offers. CardRatings.com is pleased to offer consumers free credit card ratings.
Please Note! You are welcome to republish this article as long as you state that CardRatings.com is the source for the article. You must also include a link to our website if you republish the article online. Click here for more details about using our articles and thanks for your interest!
You don't have to go too much further than the most recent news article to learn of our volatile economy and its impact on consumers. Increased fuel costs are simply the most recent tip of the iceberg. And like an iceberg, the vast majority of the problems and their potential dangers lay beneath the surface.
A new report called The Plastic Safety Net offers findings from a national survey of households with credit card debt. The report was commissioned by Demos (a non-profit, non-partisan public policy organization) 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."
I spoke with the co-author of the report, Tamara Draut, Director of the Economic Opportunity Program at Demos. Tamara oversees Demos' research, policy and advocacy work on economic security issues and has authored numerous other reports, books, and notable works. According to Tamara,
The study indicates consumers are relying more and more on their credit card for basic living expenses. Job losses or lack of upward mobility coupled with increased medical, housing, and energy costs are carving a path of consumer hardship."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."
The findings of the study are disturbing. 70% of low and middle income households reported using their credit cards as a safety net. 20% had paid off some credit card debt with a mortgage refinance in the last three years, reducing their home equity to $12,000 on average. Yet, these same households still had average credit card debt over $14,000! 47% of households had been called by a bill collector. 33% reported using credit cards to cover basic living expenses and did so an average of four out of the last 12 months.
The full report offers even more startling findings, but Tamara was very adamant to point out,
As Mark Pearce, President of the Center for Responsible Lending states,
We welcome your comments about credit card debt in our popular credit forum!
Mike Killian has been writing about credit and debt management issues that are of importance to consumers for over 8 years. He formerly served as the Guide to About's credit site, which was recognized by Forbes Magazine's "Best of the Web" for 5 of the last 6 years. Mike has also offered debt elimination seminars to businesses and community colleges for many years.
Mike offers free consumer advice on the CardRatings.com Credit Forum as well as on his own site, FreeMoneyTraining.com. While at his site, you can view additional articles as well as his schedule of upcoming seminars.
CardRatings.com is the most comprehensive source for comparing credit card offers. CardRatings.com is pleased to offer consumers free credit card ratings.
Please Note! You are welcome to republish this article as long as you state that CardRatings.com is the source for the article. You must also include a link to our website if you republish the article online. Click here for more details about using our articles and thanks for your interest!
