Consumer Payment Card News

Debt Trap

A new report concludes that Americans are using credit cards to bridge the gaps created by stagnant wages and higher costs of living. The research suggests that cardholders are trapped in a cycle of debt with unnecessarily punitive fees and interest rates. According to New York City-based Demos, from 1989 to 2004, the percentage of cardholders incurring fees due to late payments of 60 days or more increased from 4.8% to 8.0%. Demos also says 46% of very low-income credit card-indebted households spent more than 40% of their income to pay off debt. About 84% of African-American households and 79% of Latino households carried credit card debt compared with 54% of white households. Additionally, since 1989, Americans over 65 have experienced the greatest increase in the amount of credit card debt carried. The average balance for this age group increased 194% from $1,669 in 1989 to $4,906 in 2004. To view the full report, “Borrowing to Make Ends Meet: the Rapid Growth of Credit Card Debt in America,” visit “www.demos.org”:www.demos.org.

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