Finance and Economics Discussion Series (FEDS)
September 2004
Convenience or Necessity? Understanding the Recent Rise in Credit Card Debt
Abstract:
Economist disagree whether the recent increase in credit card debt has been detrimental to U.S. households. However, many rely on a measure of revolving credit published by the Federal Reserve, which captures transactions in which a credit card is used because of its advantages over cash or a check. An increase in debt stemming from such convenience use likely would not signal greater financial vulnerabiltiy for households. In this paper, I present evidence that some of the significant increase in both the level of credit card debt and its growth from 1992 to 2001 was due to convenience use.
Keywords: Household debt, credit cards, credit aggregates
PDF: Full Paper
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