Credit card debts of the poor: High and rising

Edward J. Bird, Paul Hagstrom, Robert Wild and Janet A. Weiss
Additional contact information
Edward J. Bird: University of Rochester, Postal: University of Rochester
Robert Wild: Department of Economics, Hamilton College, Postal: Department of Economics, Hamilton College
Janet A. Weiss: School of Public Policy, University of Michigan, Ann Arbor, MI 48109-1220, Postal: School of Public Policy, University of Michigan, Ann Arbor, MI 48109-1220

Journal of Policy Analysis and Management, 1999, vol. 18, issue 1, 125-133

Abstract: In this article we report on a little-known aspect of the consumer credit explosion: It has also happened among the poor. Focusing on credit cards, we use data from four releases of the Survey of Consumer Finances (SCF), 1983-1995, to trace the evolution of the debt position of the poor as compared to that of the population at large. The data indicate that from 1983 to 1995 the fraction of poor households with a credit card more than doubled, and the average balances held on these cards rose almost as rapidly as the balances of nonpoor households. In 1983, fewer than 1 in 30 poor households had credit card debts greater than twice their monthly incomes; by 1995, more than 1 in 8 did. There is no strong evidence at the moment that the added debt has increased the financial distress of these households. Nonetheless, because of the debt increase, poor households at the end of the 1990s are more vulnerable to an economic downturn than they were at the end of the 1980s.© 1998 by the Association for Public Policy Analysis and Management

Date: 1999
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Persistent link: https://EconPapers.repec.org/RePEc:wly:jpamgt:v:18:y:1999:i:1:p:125-133

DOI: 10.1002/(SICI)1520-6688(199924)18:1<125::AID-PAM8>3.0.CO;2-7

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