Study: Credit card use and revolving debt rising among Hispanics

By Jeremy M. Simon

A report from the National Council of La Raza showed that credit card use among Hispanics is increasing, as is their debt. 

The report indicated that the percentage of Latino families holding credit cards jumped to 53 percent in 2001 from 43 percent in 1992, while the average credit card debt rose 20 percent over that period. 

While credit card use among all U.S. consumers is the highest it has ever been, Hispanic Americans are more likely than nonHispanic caucasians to revolve a credit card balance.  According to the study, an estimated 77 percent of Hispanics said they had a credit card balance, while about 45 percent of nonHispanic caucasians revolved a credit card balance.

The NCLR report entitled, "Latino Credit Card Use: Debt Trap or Ticket to Prosperity?,"  notes that the issue needing to be addressed is how Hispanic households can both manage credit card debt due to their economic standing and simultaneously build credit histories.  As a result, credit cards represent a double-edged sword for many Hispanic consumers.

Additionally, the report highlighted the fact that many Hispanics do not have sufficient access to competitive interest rates.  In a recent survey, the NCLR found that 12.9 percent of Hispanics have a credit card interest rate above 20 percent, while 7.5 percent of nonHispanic caucasians have a credit card interest rate at that level.

As a result, many Latinos avoid credit cards.  Even though the number of U.S. Hispanics now carrying credit cards has increased, credit card use among Hispanics is relatively low.  Among Hispanics, 56 percent use credit cards, versus 80 percent of nonHispanic caucasians.

The barriers to credit card approval or fair interest rates for Hispanics include low income, no credit history, credit card industry policies and a lack of comparison shopping among credit cards. 

NCLR's report had a number of suggestions for helping guard Hispanic credit card users.  These ranged from greater regulatory oversight to remove abusive credit industry practices to government-funded financial counseling.

Published: March 9, 2007

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