Credit card debts of the poor: High and rising
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
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Volume (Year): 18 (1999)
Issue (Month): 1 ()
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- Ian Domowitz & Robert L. Sartain, .
"Incentives and Bankruptcy Chapter Choice: Evidence from the Reform Act of 1978,"
IPR working papers
98-7, Institute for Policy Resarch at Northwestern University.
- Domowitz, Ian & Sartain, Robert L, 1999. "Incentives and Bankruptcy Chapter Choice: Evidence from the Reform Act of 1978," The Journal of Legal Studies, University of Chicago Press, vol. 28(2), pages 461-87, June.
- Brito, Dagobert L & Hartley, Peter R, 1995. "Consumer Rationality and Credit Cards," Journal of Political Economy, University of Chicago Press, vol. 103(2), pages 400-433, April.
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