Depending on who you ask, your economic mobility can depend on either your income or on your credit score. This simply means that people who appear to be spending money may either actually have money to spend or may be using credit to make purchases. Either way, maintaining a good credit score is crucial to economic freedom in life. You never know when having credit is going to come in handy in your future. Beyond that, there are several industries where a person’s credit score can affect his or her ability to get certain kinds of employment. Credit determines so many things, from the kind of housing a person would qualify for to the kind of car they will be able to drive.
Interestingly enough, in 2012 Demos, a research and policy center founded in 2000, conducted a survey which was comprised of middle-income households that had credit card debt for a minimum of three months. This report presented the concept that in our society, credit cards have come to be used and known as a “plastic safety net.” This safety net is used by average Americans to supplement shrinking incomes, investments, and assets. Credit cards also help family to stretch their funds. Demos’s study found, when it came to African Americans, that during difficult economic times, we were more prone to resort to using credit cards for survival. However, African Americans statistically are charged higher interest rates and suffer more negative consequences from falling behind.
More than forty percent of African Americans reported using their credit cards for living expenses. These living expenses can be rather basic, from rent to mortgage payments, all the way to insurance. This rate was found to be similar to whites and Latinos; however, there is good news. Yes, economic downturns take a harder toll on African Americans in particular, but our community is paying down their debt. Just a few years ago, the average African American carried an average balance of $5,784. In 2008, Demos did a similar study and found that African Americans had an average credit card debt of $6,671.
Future investment is also a factor that African Americans, particularly the middle class, report as being the cause for a need to use credit cards. These investments in the future are found to also be in higher education, medical expenses, and entrepreneurship. As much as fifty percent of African American households in debt reported that their credit card debt was because of having a child in college. When it came to entrepreneurship efforts, ninety-nine percent of African American households are found to still have credit card debt. When it comes to whites who have started their own business, this rate is eighty percent. When it comes to medical expenses, African Americans fair about the same as whites and Latinos, with a forty-three percent of credit card debt because of out of pocket expenses.
Here one can see that those in credit card debt in the African American community are often using that debt to climb the ladder of success. The Power Is Now is excited to encourage and mentor those individuals making a difference in their families’ lives.
If you would like to learn more, then please visit www.thepowerisnow.com for all of your real estate and finance needs. We are always looking to help those that want to live life to the fullest and act now. The Power Is Now!