Credit Card Blues: The Middle Class and the Hidden Costs of Easy Credit

• Published in: Sociological quarterly 2014-03, Vol.55 (2), p.315-340
• Main Authors: Hodson, Randy, Dwyer, Rachel E., Neilson, Lisa A.
• Format: Article
• Language: English
• Subjects: Consumer credit; Consumers; Cost; Costs; Credit; Credit cards; Debt; Economic conditions; Emotional disorders; Income Distribution; Life Stage Transitions; Life transitions; Mental Health; Mental stress; Middle Class; Middle classes; Psychological Distress; Recessions; Risk; Social classes; Social privilege; Special Section: "Does the American Middle Class Have a Future???"; Stress
• ISSN: 0038-0253; 1533-8525
• DOI: 10.1111/tsq.12059

In an era of increased access to credit, it becomes increasingly important to understand the consequences of taking on unsecured consumer debt. We argue that credit can have both positive and negative consequences resulting from its ability to smooth life transitions and difficulties but that this occurs simultaneously with increased financial risks and stress resulting from carrying unsecured debt. We find that those in the middle of the income distribution suffer the greatest disruptions to mental health from carrying debt. Affluent borrowers are relatively unmoved by debt, suggesting the use of short-term debt as a convenience strategy for the financially well heeled. The least advantaged borrowers also suffer emotionally less from debt, possibly because securing spendable funds for necessities remains their most pressing concern. The onset of the Great Recession, however, produced increased emotional distress for all classes.