WHERE IS THE MISSING CREDIT CARD DEBT? CLUES AND IMPLICATIONS

Authors


  • Note: I thank the Payment Card Center at the Federal Reserve Bank of Philadelphia for hosting me as a Visiting Scholar, Adeel Ikram for research assistance, and Mark Furletti, Kathleen Johnson, Art Kennickell, Bill Lang, Doug Staiger, the editor Marcel Timmer, two anonymous referees, and especially Christopher Ody for comments.

*Jonathan Zinman, Department of Economics, Dartmouth College, 314 Rockefeller Hall, Hanover, NH 03755, USA (jzinman@dartmouth.edu).

Abstract

I create comparable estimates of aggregate credit card use based on household data from the Survey of Consumer Finances (SCF) and industry data. The two sources match up well on credit card charges and fairly well on account totals. But the SCF always yields much lower estimates of revolving debt. My estimated lower bound for the discrepancy in 2004 is half of the revolving credit card debt total implied by industry data. There is no obvious source for this remaining discrepancy and some evidence that the discrepancy has grown over time. Such growth is worrisome because it parallels substantial changes in credit card use and in the pool of credit card users, suggesting that the discrepancy could be driven by household underreporting that is correlated with unobserved heterogeneity. This correlation could confound inference on the relationship between credit card borrowing and outcomes of interest like household financial condition, consumption paths, and portfolio choice. Given this possibility it is critical to continue developing evidence on whether and why household surveys undercount credit card borrowing.

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