Working Paper

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. household. 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 vulnerability for households. In this paper, I present evidence that some of the significant increase in both the level of credit card debt and it growth from 1992 to 2001 was due to convenience use.

Keywords: Credit cards; Debt;

Bibliographic Information

Provider: Board of Governors of the Federal Reserve System (U.S.)

Part of Series: Finance and Economics Discussion Series

Publication Date: 2004

Number: 2004-47