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New National Survey: Credit CARD Act A Success, But Plastic Safety Net Persists

WASHINGTON - On the third anniversary of President Obama’s signing the Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit CARD Act) into law, a new national survey from policy center Demos shows that average debt has declined and new regulations are benefiting millions. Nevertheless, working and middle class families are still using credit cards as a private safety net to make ends meet.

REPORT: The Plastic Safety Net >>>

BRIEF:  The Credit CARD Act: It’s Working >>>

The Plastic Safety Net: Findings from the 2012 National Survey on Credit Card Debt of Low- And Middle-Income Households” builds on Demos’ previous 2005 and 2008 surveys and provides unique data on how the Great Recession, its aftermath, and the passage of major consumer credit card protections have affected American families’ economic security.

The survey results are clear: The Credit CARD Act has worked, protecting households from unreasonable credit card fees and interest rate hikes. For example, in Demos’ 2008 Survey, half of households reported accruing late fees -- in 2012, it was just 28 percent due to a new 21-day billing window requirement. New interest accumulation disclosures on billing statements are helping one-third of households pay down debt faster, and African American and Latino households are especially benefiting from new over-the-limit fee protections. 

However, as successful as the Credit CARD Act has been, “The Plastic Safety Net” lays out the persistent problems behind Americans’ reliance on credit cards that consumer credit reforms alone cannot address: three decades of slow income growth combined with increases in basic costs of living are forcing too many Americans to turn to a privatized “plastic safety net” to cover hard times:

  • 40 percent of surveyed households used credit cards to pay for basic living expenses such as rent or mortgage bills, groceries, utilities, or insurance in the past year.
  • Nearly half of surveyed households carried debt from out-of-pocket medical expenses on their credit cards. The average amount of medical credit card debt was $1,678. Among people with self-described “poor credit,” 55 percent cite medical debt as a contributing factor.
  • 86 percent of households who incurred expenses due to unemployment in the past year took on credit card debt as a result.

In order to fix this credit crisis, recommendations in “The Plastic Safety Net” look beyond credit card regulation, calling on businesses and the government to bolster unemployment benefits, raise the minimum wage to help working people cover expenses without borrowing, strengthen the right of workers to organize, and ensure that the implementation of the Affordable Care Act helps prevent crippling medical debt.

“It takes us all – individuals, government and businesses – to create a growing and secure middle class. But today, both government and businesses are cutting back on that commitment, leaving families to cope through a private safety net that comes with interest and fees,” said Amy Traub, co-author of “Plastic Safety Net” and Senior Policy Analyst at Demos. “The trends damaging household economic security and pushing families into debt started long before the Great Recession and will continue after the recovery if we don’t change course and invest in crucial public supports, like debt-free education and affordable health care, and demand middle-class jobs from more employers.”

To interview co-authors Amy Traub or Catherine Ruetschlin, please see the contact information above.

“The Plastic Safety Net” is the first in a series of reports that will look at the findings of the 2012 National Survey on Credit Card Debt of Low - and Middle-Income Households in greater depth.


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A multi-issue national organization, Demos combines research, policy development, and advocacy to influence public debates and catalyze change. We publish books, reports, and briefing papers that illuminate critical problems and advance innovative solutions; work at both the national and state level with advocates and policymakers to promote reforms; help to build the capacity and skills of key progressive constituencies; project our values into the media by promoting Demos Fellows and staff in print, broadcast, and Internet venues; and host public events that showcase new ideas and leading progressive voices.

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