Sep 24 2008

Consumer Debt Stress and Credit Cards

Report  
Number  
170

This research brief explores debt-related stress with a focus on credit card debt.

Mark Meyer
Mark Meyer
President + CEO
Filene Research Institute
Report Number 170

Executive Summary

In its ongoing efforts to analyze issues affecting the future of consumer finance, we have released the second in a series of Consumer Finance Research Briefs, based on information derived from Ohio State University’s Consumer Finance Monthly (CFM) survey. Consumer Debt Stress and Credit Cards, explores debt-related stress with a focus on credit card debt.

What is the research about?

The analysis seeks to address the following research questions:

  • Did levels of consumer debt stress increase in 2007 from 2006 as the sub-prime mortgage crisis publicly unfolded?
  • How do levels of consumer debt stress vary by credit card debt indicators such as total credit card debts, missed payments, accounts sent to collections, and previous bankruptcies?
  • How do levels of consumer debt stress vary by demographic variables such as age, annual household income, gender, race/ ethnicity, and marital status?

What are the credit union implications?

The analysis of consumer debt-related stress and credit card debt presented in this research brief supports the following recommendations for credit union executives to consider as they work to help members through this period of economic turmoil and uncertainty:

  • Continue to take into account the credit card and demographic indicators identified in this report in your ongoing analyses of members’ total credit card debt.
  • Practice proactive member counseling by learning to recognize and help reduce debt-related stress.
  • Promote your credit union’s “consumer friendly” credit card terms and conditions and help members learn to select credit cards with the most favorable features.
  • Where appropriate, transfer credit card debt from members’ other cards to credit union credit cards or debt- consolidation loans, and assist members with closing other accounts.