A study released by Demos, a research and advocacy organization, may shed light on why some working families have credit card debt and others don't.
The study, "Understanding the Debt Difference," is based on survey research of 2,248 low- and middle-income adults between April 2008 and August 2008, and contrasts the demographics, financial habits and economic circumstances of those with credit card debt and those without it.
For survey respondents who met the criteria for the "indebted" group, the average amount owed was $9,799, and 52% said they had the same or more debt than three years before. More than half of the indebted households said they had been late or had missed a credit card payment, and 37% were still paying off a credit card they had cancelled.
The report suggests that "economic shocks" such as major medical expenses and unemployment–which households with credit card debt were found to be more likely to experience–have led more low- and middle-income families to resort to and then rely on credit cards to meet basic expenses.
"This study is a reminder that credit card debt has harsh consequences for the households which have no other options," said Bill Hardekopf, CEO of LowCards.com. "If you don't have assets, a credit card may be the only way to pay for essentials. But once you are caught in this trap, it is difficult to save and build up the resources that will help you get through the next crisis."
To help remedy the problem of credit card debt, the authors of the paper, José García and Jennifer Wheary, recommended promoting savings, strengthening social insurance protections and ensuring fair lending practices.