Convenience or Necessity? Understanding the Recent Rise in Credit Card Debt

29 Pages Posted: 20 Dec 2004

See all articles by Kathleen Johnson

Kathleen Johnson

Board of Governors of the Federal Reserve System

Date Written: September 2004

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

JEL Classification: D12, E51

Suggested Citation

Johnson, Kathleen, Convenience or Necessity? Understanding the Recent Rise in Credit Card Debt (September 2004). Available at SSRN: https://ssrn.com/abstract=632366 or http://dx.doi.org/10.2139/ssrn.632366

Kathleen Johnson (Contact Author)

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

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