NAACP and Demos Release Credit Card Debt Report

Many African American families are relying on credit cards to make ends meet and invest in their future according to the new study, “The Challenge of Credit Card Debt for the African American Middle Class” released today by the NAACP and Demos.

Like those in other communities, 42 percent of African Americans report using their credit cards to cover basic living expenses such as rent, mortgage payments, groceries, utilities and medical insurance because they do not have enough money in their checking or savings accounts.

African Americans are more likely to use credit cards to pay for higher education and entrepreneurial ventures as well.

Catherine Ruetschlin co-author and lead researcher at Demos stated:

The African American middle class is more likely to have to use credit cards to finance investments in their future because they have fewer assets to fall back on relative to other households.

The report also highlights the repercussions credit card debt has on African Americans’ household finances. 

While many middle class Americans of all races are relying more on credit cards to make ends meet, the report found that African Americans face greater challenges to their financial security that are unlike those of white households. For example, African Americans are also more likely to pay high interest rates and suffer more severe consequences of debt than other groups.

  • The African American middle class reports worse credit scores and different causes of poor credit.
  • African Americans are more likely to be called by bill collectors, and to have seen credit tighten.

The report concludes with several recommendations critical to addressing these disparities and advancing fairness and security around consumer credit.

Dedrick Muhammad, Sr. Director of NAACP Economic Department and co-author of the report stated:

The NAACP has been engaged in this issue for a long time given the racially discriminatory institutional and structural barriers African Americans have faced when attempting to access credit.  To now use credit history as a criterion for non-lending purposes like employment is another unnecessary barrier to economic opportunity that will keep more African Americans out of the middle class. This report reinforces why we need reforms in credit reporting.

Read the entire report here