Sustained Credit Card Borrowing

36 Pages Posted: 24 Jun 2019 Last revised: 6 Oct 2019

See all articles by Daniel Grodzicki

Daniel Grodzicki

Office of the Comptroller of the Currency

Sergei Koulayev

Consumer Financial Protection Bureau

Date Written: June 12, 2019


Using a large panel of credit card accounts, we examine the dynamics of credit card borrowing and repayment in the United States and what these imply for the expected costs of credit card debt to consumers. Our analysis reveals that: (1) credit cards are predominantly used to borrow, (2) card debt is sustained for long periods and balances frequently rise before being repaid, (3) this debt is potentially more costly than anticipated. Specifically, we document that 82% of outstanding balances are debt and that 70% of this debt accrues to those borrowing continuously for a year or more. The expected annualized cost of a borrowing episode is 28% of its initial balance, or 13 p.p. higher than the average APR. Moreover, credit scores decline during episodes, further raising the expected cost of borrowing on a card.

Keywords: Financial Markets, Personal Finance

JEL Classification: D14, G19

Suggested Citation

Grodzicki, Daniel and Koulayev, Sergei, Sustained Credit Card Borrowing (June 12, 2019). Available at SSRN: or

Daniel Grodzicki (Contact Author)

Office of the Comptroller of the Currency ( email )

400 7th Street SW
Washington, DC 20219
United States

Sergei Koulayev

Consumer Financial Protection Bureau ( email )

United States

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