WASHINGTON - July 28 - As the recession continues to squeeze financially vulnerable American households, they are turning to credit cards to make ends meet, according to "The Plastic Safety Net: How Households are Coping in a Fragile Economy," a new report published today by Demos, a national research and policy center.

This is Demos' second national survey examining credit card debt among low- and middle-income households--those whose incomes fell between 50 percent and 120 percent of local median income. It provides new information about why households are in credit card debt, how long they have carried their debt, and the impact this debt has had on their economic security.

Research shows that credit card debt in America has quadrupled since 1989 and increased 41 percent just since 2000. Americans now owe over $1 trillion in credit card debt, owing largely to job instability and medical costs, and personal bankruptcies rose from 673,615 in 2007 to over 1.2 million in 2009.

And, just as the recession began to take hold, millions of families had already depleted their home equity to pay off costly credit card debt as home values decreased, leaving them with few assets on which to fall back.

The "Plastic Safety Net" survey helps provide a more accurate picture of how debt is accumulated and how it impacts low- to middle-income American families, especially during the economic downturn.

"American families are facing financial hardship not experienced for generations, and we've commissioned these surveys to tell us precisely why households are turning to credit cards so often" says Tamara Draut, Vice President of Policy and Programs at Demos and co-author of the report. "The results are clear: wages have stagnated while medical and housing costs have skyrocketed, and if confronted with a layoff or health emergency there are few, if any, personal or public safety nets adequate enough to help in a crisis. Households are turning to high-cost credit cards to keep afloat."

Key survey findings from "The Plastic Safety Net":

• The average credit card debt of low- and middle-income indebted households in America is $9,827.

• The average amount of time that households reported being credit card indebted is 5.1 years.

• 3 out of 4 low- and middle-income households reported using their credit cards as a safety net--relying on credit to pay for car repairs, house repairs, layoff or job loss, money given or loaned to relatives, college expenses or starting or running a business.

• More than 1 out of 3 households reported using credit cards to cover basic living expenses, on average for 5 out of the last 12 months.

• The most important predictor of higher "debt-stress" levels was whether a household relied on credit cards to cover basic living expenses such as rent, mortgage payment, groceries, utilities or insurance.

• For 1 in 2 households out-of-pocket medical expenses contributed to a families' credit card debt, with an average of $2,194 dollars related to out-of-pocket medical expenses.

• The average interest rate paid on a families' card with the highest balance was 14.8% with close to 1 in 4 indebted households paying more than 20% interest on their card.

"The Plastic Safety Net" also reports that Americans are increasingly relying on credit cards to pay for essentials as wages no longer cover expenses:

In the past five years credit card indebted homeowners used an average of $14,344 in home equity to pay down credit card debt.

The majority of credit card indebted households cited using tax refunds toward debt reduction and nearly half of respondents cited working extra hours or taking on an extra job in order to get out of debt.

"For a long time families have been using credit cards as a safety net in absence of stronger social policies and federal regulation-a condition exacerbated by today's recession," said report co-author Jose Garcia, Associate Director of Research and Policy in Demos' Economic Opportunity Program. "With so many American households putting their basic necessities on credit cards and using their limited home equity to pay it off, if they have any equity at all, we have a nation with millions on the financial edge."

Among the report's key policy recommendations:

• Promote increased savings, not increased debt, to help families meet unexpected financial emergencies.

• Modernize the unemployment insurance system and expand coverage and benefit levels.

• Strengthen the position of low-wage workers in the labor market.

• Address rising health care costs and the growing number of uninsured.

• Establish a new agency focused on consumer financial protection.