July 31, 2009
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Credit Card Debt Mess, Pt.2
How High Is It Going.Demos' survey was conducted over a five month period between April and August of 2008. They interviewed 1,205 credit card consumers of lower and middle income household heads. The income of those interviewed represented approximately 50% of the American households. At the time of the survey, participants had been carrying credit card debt for three months or more. The survey revealed that 42% of the respondents had more debt than they had three years previously. On the other hand, 48% of the respondents said they had reduced their debt over the previous three years. When asked if they had raised their credit card debt after having successfully lowered the balance, 52% indicated they had done so within the previous three years.
Within the group, senior Americans age 65 and older had increased their credit card debt by 26% over the past three years. Seniors as a whole are the second highest group carrying an average debt of $10, 235. When looking at ethnicity, Hispanics have increased their average card debt by 41% from the previous three years and are carrying an average debt of $10,002 per household. Comparing income levels, households with income greater than $50,000 have increased card debt by 3%, and are carrying the highest average credit card debt of $11,914.
Caution should be taken in interpreting these ethnicity results for two reasons: First, there was a higher percentage of Hispanics in the survey sample and secondly, Hispanic households typically include more adults than many other races. There is also some concern that Hispanic households may experience higher interest rates and greater penalties which has made them the target of credit card companies as more lucrative customers. The report speculates that the increase in senior card debt could be attributed to the reduction in retirement accounts that occurred at the beginning of the recession.