Credit Cards: Transactional Convenience or Debt-Trap?
38 Pages Posted: 16 Jun 2017 Last revised: 1 Dec 2017
Date Written: November 28, 2017
We survey individuals on their credit card usage. Contrary to popular press, most credit card holders use credit cards in a responsible manner. They tend to use credit cards for transaction convenience and pay little interest costs. Only a minor subset of people uses credit cards to access expensive credit, with only 7% of credit card holders in our sample never paying the balance in full. Credit card debt is more common among older, less financially literate, and less trusting respondents. Even individuals with credit card debt are well aware about its costs and are likely to make informed financial choices.
Keywords: Credit card debt, household finance, stock market participation, financial literacy, trust, rationality.
JEL Classification: D14; D91; G11
Suggested Citation: Suggested Citation