Facing unemployment, out-of-pocket medical bills, and a fast-disappearing ladder out of poverty, low- and middle-income Americans are using credit cards to meet basic needs like rent, groceries, and utilities.

The Plastic Safety Net: Findings from the 2012 National Survey on Credit Card Debt of Low- and Middle-Income Households | Demos

Since 2008, working families have done everything they can to get by – changing spending habits, paying down debt, taking on 2nd (or 3rd jobs), digging into savings and retirement funds, and even cutting back on medical care – but they’re still falling behind.

According to a new report released by Demos, the average credit card debt among Americans who carried a balance on their credit card for at least three months is $7,145, largely driven by unemployment and skyrocketing out of pocket medical bills.

The “plastic safety net” is the final refuge for increasing numbers of families who have seen prices for food, gas and health care increase while wages haven’t kept up. Economic productivity is up overall, but median family net worth has dropped to levels not seen since the early 90s. Corporate profits have never been higher as budgets for state and local public services have been slashed across the country.

But there is a way out. It starts by building economic security from the bottom up – through a stronger minimum wage, guaranteed health and retirement benefits, and wide access to affordable education and retraining.

Sound public policies that support economic opportunity for all – instead of tax breaks for the 1% or wealthy corporations – will allow American families to throw away the plastic crutch, and stand on sound financial footing.

~ By Ashwin Warrior, EOI Intern