New CU-Backed Study Finds Credit CardDebt Soaring

WASHINGTON - (10/13/05) -- The average consumer is wracking upcredit card debt as never before, often using plastic to pay forhousehold expenses, monthly mortgages and even, business expenses,according to a new report issued Wednesday by the Center forResponsible Lending, a subsidiary of Self-Help CU. "Americanfamilies are facing financial hardship not experienced forgenerations, and we commissioned this survey to tell us preciselywhy they are turning to credit cards so often," said Tamara Draut,director of the Economic Opportunity Program for Demos, a co-authorof the report. Key findings from the report, called The PlasticSafety Net: The Reality Behind Credit Card Debt in America, are:the average credit card debt of low- and middle-income householdshas risen to $8,650; 70% of low and middle-income households usetheir credit cards as a safety net to pay basic living expenses,medical expenses or home repairs; 20% of homeowners paid off somecredit card debt by refinancing their mortgage, reducing the equitythey own in their homes, but still had a credit card debt over$14,000. The study shows that credit card debt in America hastripled since 1989, and increased by 31% in just the last fiveyears, to more than $800 billion. Since 1989, the study noted,consumer bankruptcies have also tripled in number from 616,000 to1.8 million a year. Release of the report comes five days beforethe effectiveness of the new bankruptcy law which will make itharder for consumers to erase all of their debts throughbankruptcy.