With a Plastic Safety Net, Debt Is Inevitable

A young woman was asking me recently for tips on how to save. While we were talking, she admitted that she had a lot of credit card debt.

She was struggling to keep current because she didn't want to be seen as a bad person.

"Someone told me that poor credit is a sign that you don't have integrity," she said.

She was especially embarrassed because she is African American.

You see, in the black community, it's common for people to say things like "Our people are more worried about how we look than what our bank account looks like."

Somehow in the black community, the notion exists that we are America's biggest spendthrifts: Our closets have more clothes, we tell one another; we buy bigger and more expensive cars; our credit card debt is worse than the rest of America's.

Well, according to an illuminating report by two public policy groups looking at credit card debt in America, it turns out that blacks aren't the biggest credit card users.

"The Plastic Safety Net: The Reality Behind Debt in America" found that in low- and middle-income households, whites have the highest amount of credit card debt, over African Americans and Hispanics.

Non-Hispanic Caucasians had an average credit card debt of $8,972, compared with $7,926 for African Americans and $6,432 for Hispanic consumers.

But no matter the skin color of the consumer, the survey found, American families are turning to credit cards to make ends meet.

"American families are facing financial hardship not experienced for generations, and we commissioned this survey to tell us precisely why they are turning to credit cards so often," said Tamara Draut, director of the Economic Opportunity Program at Demos, a nonpartisan, nonprofit public policy research and advocacy group based in New York. It co-authored the report with the Center for Responsible Lending, based in Durham, N.C.

I'm sure you've heard the skyrocketing consumer-debt figures. As reported by Demos and the center, credit card debt has almost tripled since 1989. Americans now owe close to $800 billion on their credit cards. People cashed out $333 billion in home equity from 2001 to 2003 in an attempt to free up much-needed cash, a lot of it to eliminate credit card debt.