FACTS ABOUT CONSUMER CREDIT CARD DEBT AND BANKRUPTCY
Documented Connection Between Expansion of Consumer Credit
and Increase in Bankruptcy Filings
Studies by the Congressional Budget Office, the Federal Deposit Insurance Corporation, and
independent economists link the rise in consumer bankruptcies directly to the rise in consumer
debt.1
Deregulation of consumer credit interest rates have not produced a significant decrease in
interest rates. Instead, deregulation has prompted aggressive marketing and a loosening of
underwriting standards that have contributed to a rise in consumer bankruptcies.2
The Growth of Consumer Credit Card Debt
Eighty percent of all households have at least one credit card. With well over one billion
cards in circulation, the average household has about a dozen credit cards. About sixty percent of
cardholders carry credit card debt from month to month.3 The average credit card debt for
households that carry a balance is more than $10,000.4 Americans owe more in credit card debt
than for education.5
1 David Moss & Gibbs Johnson, The Rise of Consumer Bankruptcy: Evolution, Revolution or Both 73 Am. Bankr. L.J.
311 (Spring 1999); Diane Ellis, The Effect of Consumer Interest Rate Deregulation on Credit Card Volumes, Charge-
offs, and the Personal Bankruptcy Rate, Bank Trends 98-05 (Division of Insurance, FDIC February 1998); Lawrence
Ausubel, Credit Card Defaults, Credit Card Profits, and Bankruptcy, 71 Am. Bankr. L.J. 249 (1997); Statement of Kim
Kowalewski, Chief, Financial and General Macroeconomic Analysis Unit, Congressional Budget Office, before the
Subcommittee on Administrative oversight and the Courts, Committee on the Judiciary, United States Senate, p. 4
(April 1997); Jagdeep S. Bhandari & Lawrence Weiss, The Increasing Bankruptcy Filing Rate; A Historical Analysis,
National Conference of Bankruptcy Judges (Winter 1993).
2 E.g., Ellis, Consumer Interest Rate Deregulation, supra ("Unf