Latino Consumers Need Stronger Protections to Navigate the Credit Card Market, New NCLR Report Concludes

“Today the National Council of La Raza NCLR, the largest national Hispanic civil rights and advocacy organization in the U.S., released a report which found that unfair and abusive credit card policies and practices trap Latinos in a cycle of debt. The report, Latino Credit Card Use: Debt Trap or Ticket to Prosperity?, which examines practices in the credit card industry, also shows that Latinos need greater access to affordable credit.

“It is essential that Latino families have access to affordable credit in order to move into the ranks of the middle class,” said Janet Murguí, NCLR President and CEO.

The report also demonstrates how Latinos are being affected by harmful credit card industry practices. For example, credit card issuer policies and fees are exacerbating the financial problems of many Latino families who depend on credit cards to make ends meet. Almost 39% of Latinos reported basic living expenses and 30% reported medical expenses as contributing to their household debt.

Major findings include the following:

While credit card use among Hispanics is on the rise, a substantial share of Latino households still do not have access to credit. A national survey revealed that 80% of American households use credit cards compared to only 56% of Hispanic households.
Credit card debt is on the rise in the Hispanic community. Between 1992 and 2001, the share of Hispanic families who held credit cards grew from 43% to 53%, and the average credit card debt among Hispanics increased by nearly 20% for that same period.
The majority of American households who use credit cards do not carry a balance, but most Latino credit card users do. More than 45% of credit cards users report revolving a balance compared to 77% of Latinos.
A substantial share of all credit card users and a proportionately larger share of Latino credit card users have difficulty managing their credit card debt. A recent Demos study on household debt showed that while 7.3% of all respondents were “maxed out and can’t use [their cards]” and 12.7% characterized their debt situation as “burdensome and not enough money to pay down [the balance],” 11.4% of Hispanics reported they were “maxed out and can’t use [their cards],” and 19.3% of Hispanics described their situation as “burdensome and not enough money to pay down [the balance].”

To address these disparities, the report recommendations include requiring a monthly minimum payment warning in credit card statements; banning unethical and harmful industry practices; and requiring regulators to set higher standards for the industry. Finally, policy-makers must support community-based financial counseling programs to help consumers distinguish between good and bad debt.

For a copy of Latino Credit Card Use: Debt Trap or Ticket to Prosperity?, visit NCLR’s website at www.nclr.org.”

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