The Debt Dilemma

27 Pages Posted: 17 Dec 2008

See all articles by Katherine M. Porter

Katherine M. Porter

University of California - Irvine School of Law

Date Written: December 1, 2008


The current dynamic of increasing credit card use juxtaposed with regulatory pressure on the credit card industry reflects our society's deep ambivalence about paying with plastic. This Review of Professor Ronald J. Mann's Charging Ahead: The Growth and Regulation of Payment Card Markets, praises the book for its refreshingly balanced perspective on the optimal use of credit cards. The Review begins by unpacking the regression analyzes that are the centerpiece of the book's examination of the economic effects of credit cards. Mann isolates credit card spending as a driver of increased total consumer debt, even after controlling for card debt. He then shows that borrowing on cards - distinguished from noncard borrowing - is separately associated with an increase in bankruptcy filings. The Review then identifies an important limitation of Charging Ahead. An aggregate examination of the effects of credit cards does not reveal how card use affects the variety of card use strategies by individual families. Analyzing original data from the Consumer Bankruptcy Project, the Review highlights the vulnerability of "cardless" families to financial hardship. Credit card reform may effectively alter Americans' calculus about whether to pay with credit cards, and Mann offers many cogent reforms. Such behavioral change does not itself provide families with the income and savings necessary to protect them from adverse economic events as many factors beyond card use expose families to financial stress.

Keywords: credit cards, debit cards, consumer debt, bankruptcy, payment systems, household finance

JEL Classification: K35, K12, G21, E21, D14, D12, D10

Suggested Citation

Porter, Katherine M., The Debt Dilemma (December 1, 2008). U Iowa Legal Studies Research Paper No. 08-41, Michigan Law Review, Vol. 106, 2008, Available at SSRN:

Katherine M. Porter (Contact Author)

University of California - Irvine School of Law ( email )

401 E. Peltason Dr.
Ste. 1000
Irvine, CA 92697-1000
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics