Credit Card Utilization and Consumption Over the Life Cycle and Business Cycle

Fulford, Scott; Schuh, Scott

doi:10.2139/ssrn.3124451

Cited by 15 publications

(22 citation statements)

References 47 publications

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“…A few other studies analyze household finance and payment behavior using administrative data from a credit reporting agency. Fulford and Schuh (2017) examine changes in consumer credit over the business cycle and life cycle using Equifax data. Demyanyk and Koepke (2012) use Equifax data to examine consumers' deleveraging behavior after the 2007-2009 financial crisis.…”

Section: Literature Reviewmentioning

confidence: 99%

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Credit Card Debt and Consumer Payment Choice: What Can We Learn from Credit Bureau Data?

Stavins

2020

J Financ Serv Res

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We estimate a two-stage Heckman selection model of credit card adoption and use with a unique dataset that combines administrative data from the Equifax credit bureau and self-reported data from the Survey of Consumer Payment Choice, a representative survey of US consumers. Even though the survey data from the borrowers vary somewhat from the data provided by the lenders, the results based on the merged data are qualitatively similar to those based exclusively on self-reported surveys. This finding suggests that if administrative data are not available, it might be sufficient to use survey data to estimate consumer behavior. We find that credit card revolvers have lower income and are less educated than other cardholders. Although consumers who carry credit card debt might be liquidity constrained and not have cheaper borrowing alternatives, the high cost of paying off credit card debt could exacerbate existing inequalities in disposable income among consumers.

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Section: Literature Reviewmentioning

confidence: 99%

“…The pattern is similar to the one observed with the average risk score. As consumers grow older, and as their incomes rise, they have more cards and higher overall credit limits on average (Fulford and Schuh 2017;Agarwal, Ambrose, and Liu 2006).…”

Section: A Risk Score and Credit Limit By Demographics And Incomementioning

confidence: 99%

Credit Card Debt and Consumer Payment Choice: What Can We Learn from Credit Bureau Data?

Stavins

2020

J Financ Serv Res

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“…Second, as documented at the outset, analysis of a wide variety of empirical evidence (most recently that of Fulford and Schuh (2017) and Parker (2017)) provides strong support for the view that that the null hypothesis should be in favor of models that allow heterogeneity in discounting rather than not.…”

Section: Distress As Delinquency and Bankruptcymentioning

confidence: 92%

“…4 Closest of all is the work of Fulford and Schuh (2017), who demonstrate that household credit utilization and life cycle consumption and savings (credit-use) patterns clearly suggest important heterogeneity in time preference. Indeed, these authors estimate that nearly two-thirds (64%) of all households are effectively impatient, enough so to live essentially hand-to-mouth.…”

Section: Related Workmentioning

confidence: 99%

The Persistence of Financial Distress

Athreya

Mustre-del-Rio

Sánchez

2017

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Using recently available proprietary panel data, we show that while many (35%) US consumers experience financial distress at some point in the life cycle, most of the events of financial distress are primarily concentrated in a much smaller proportion of consumers in persistent trouble. Roughly 10% of consumers are distressed for more than a quarter of the life cycle, and less than 10% of borrowers account for half of all distress events. These facts can be largely accounted for in a straightforward extension of a workhorse model of defaultable debt that accommodates a simple form of heterogeneity in time preference but not otherwise.JEL classification: D60, E21, E44.

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“…Closest of all is the work of Fulford and Schuh (2017), who demonstrate that household credit utilization and life cycle consumption and savings (credit-use) patterns clearly suggest important heterogeneity in time preference. Indeed, these authors estimate that nearly two-thirds (64%) of all households are effectively impatient, enough so to live essentially hand-to-mouth.…”

Section: Related Workmentioning

confidence: 99%

The Persistence of Financial Distress

Athreya¹,

Mustre-del-Rio²,

Sánchez³

2017

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Using proprietary panel data, we show that many US consumers experience financial dis-tress (35% when distress is defined by severe delinquency, e.g.) at some point in their lives. However, most distress events are concentrated in a much smaller proportion of consumers in persistent trouble. While only 10% of consumers are distressed for more than a quarter of their lives, fewer than 10% of borrowers account for half of all distress events. These facts can be largely accounted for in a straightforward extension of a workhorse model of defaultable debt with informal default that accommodates a simple form of heterogeneity in time preference, but not otherwise.JEL classification: D60, E21, E44

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Credit Card Utilization and Consumption Over the Life Cycle and Business Cycle

Cited by 15 publications

References 47 publications

Credit Card Debt and Consumer Payment Choice: What Can We Learn from Credit Bureau Data?

Credit Card Debt and Consumer Payment Choice: What Can We Learn from Credit Bureau Data?

The Persistence of Financial Distress

The Persistence of Financial Distress

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