The Plastic Safety Net: Americans running up credit card debt to make ends meet

Facing unemployment, out-of-pocket medical bills, and a fast-disappearing ladder out of poverty, low- and middle-income Americans are using credit cards to meet basic needs like rent, groceries, and utilities.

The Plastic Safety Net: Findings from the 2012 National Survey on Credit Card Debt of Low- and Middle-Income Households | Demos

Since 2008, working families have done everything they can to get by – changing spending habits, paying down debt, taking on 2nd (or 3rd jobs), digging into savings and retirement funds, and even cutting back on medical care – but they’re still falling behind.

According to a new report released by Demos, the average credit card debt among Americans who carried a balance on their credit card for at least three months is $7,145, largely driven by unemployment and skyrocketing out of pocket medical bills.

The “plastic safety net” is the final refuge for increasing numbers of families who have seen prices for food, gas and health care increase while wages haven’t kept up. Economic productivity is up overall, but median family net worth has dropped to levels not seen since the early 90s. Corporate profits have never been higher as budgets for state and local public services have been slashed across the country.

But there is a way out. It starts by building economic security from the bottom up – through a stronger minimum wage, guaranteed health and retirement benefits, and wide access to affordable education and retraining.

Sound public policies that support economic opportunity for all – instead of tax breaks for the 1% or wealthy corporations – will allow American families to throw away the plastic crutch, and stand on sound financial footing.

~ By Ashwin Warrior, EOI Intern

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Posted in An Inclusive Economy

Comments

  1. Denise says:

    The article states that the “way out…is through a stronger minimum wage, guaranteed health and retirement benefits, and wide access to affordable education and retraining.”

    My team and I think the way out includes wide access to affordable health as well as educating and engaging patients regarding health issues. Give people options and transparency with health and this will start result in less stress on the family budget.

    Denise and the Sprig Health Team

    • Hi Denise – Improving access to affordable health care will certainly make it easier for patients to learn about potential health issues and promote more preventative care in general. But I’m curious: you say “give people options and transparency”, without defining what those words would mean in a health care context. Can you be more specific? ~Aaron

      • Denise says:

        Hi Aaron –

        Options may include a list of medical professionals that could treat you along with their locations, times, and potentially ratings. Leveraging technology to simplify this process will reduce the leg work involved. Imagine if you could go to a website and see different doctors specialties, services, locations, and schedule availability. It’s almost like a marketplace to select a provider/practice within an insurance exchange, or, for uninsured cash-paying customers, just a stand alone marketplace.

        Transparency means knowing what you are going to pay before you enter a health facility. Although some services like lab tests and imaging services may increase the bill in the end, why can’t people see how much traditional services are before they see a medical professional?

        The root of the problem is that health is costly. It’s my premise that enabling greater transparency and providing more options will not only help control costs, but also create more positive experiences in health care.

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