Education, joblessness play major factors in credit card debt

Over the last few years, millions of Americans have likely learned the hard way that credit card debt can be quite damaging to their household budgets. However, it seems that there is often a number of factors that can go into consumers carrying more of it than they should, and knowing these potential risks might help them to better avoid such issues in the future.

When considering what drives low- and middle-income households nationwide into credit card debt, it seems that the largest determining factor is the education levels of those who control the accounts, according to a new survey from Demos. For instance, people who only have high school degrees are 22 percent more likely to have some sort of credit card debt in their name than those who graduated from college.

"Contrary to popular belief, we find little evidence that households with credit card debt are less responsible in their spending habits than households that do not have accumulated debt," the researchers wrote. "Instead, we see that, among similarly situated low- and middle-income households of working age, factors like education, value of assets to fall back on, insurance coverage, and whether a household member has lost a job are among the foremost predictors of whether a household will accumulate credit card debt."

What's the trend?
As with education levels, a number of other factors - unemployment, lack of insurance, the value of a person's home and savings, etc. - all seem to be in some way related to income levels, the report said. Those who went without health insurance at some point in the last three years were 20 percent more likely to have credit card debt than those who remained insured the whole time, and likewise, households in which a wage earner was unemployed for at least two months were 14 percent more likely to carry these balances. Because most consumers usually obtain health coverage through their jobs, these concerns are probably related.

Consumers who are worried about their bottom lines as a result of credit card debt might want to consider the best ways available to them to attack the problem head-on. The more that can be done to reduce these outstanding balances in the short-term, the less they will have to be addressed later on, increasing financial flexibility for potentially years to come.