Embargoed Access
Credit card and payday loan borrowing : evidence in the SCF 2010–2019
License
Access Rights
Cadmus Permanent Link
Full-text via DOI
ISBN
ISSN
0165-1765; 1873-7374
Issue Date
Type of Publication
Keyword(s)
LC Subject Heading
Other Topic(s)
EUI Research Cluster(s)
Initial version
Published version
Succeeding version
Preceding version
Published version part
Earlier different version
Initial format
Author(s)
Citation
Economics letters, 2022, Vol. 221, Art. 110872, OnlineOnly
Cite
LI, Tsung-Hsien, Credit card and payday loan borrowing : evidence in the SCF 2010–2019, Economics letters, 2022, Vol. 221, Art. 110872, OnlineOnly - https://hdl.handle.net/1814/75775
Abstract
Unsecured borrowing plays an important role for consumers in smoothing consumption. Each year, almost 40% of U.S. house holds have credit card debts and 4% borrow using a high-cost payday loan. This paper aims to explore the similarities and differences between both types of borrowers. Using the Survey of Consumer Finances(SCF)from 2010 to 2019, I document that: (1) credit card borrowers are middle-aged, upper-middle-class, with some college exposure, and financially literate; (2) payday loan borrowers are young, low-incomeand low-wealth, less educated,and less financially literate; and (3) payday loan borrowers lack the financial knowledge of inflation and risk diversification, but not of compound interest.
Table of Contents
Additional Information
Published online: 29 September 2022