The Credit Card Debt Puzzle: New Facts and Theory

The Credit Card Debt Puzzle: New Facts and Theory | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article The Credit Card Debt Puzzle: New Facts and Theory Carolyn St Aubyn This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-3845133/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract Simultaneously holding liquid assets and credit card debt is known as the credit card debt, or co-holding, puzzle. Around 45% of households in the US Panel Study of Income Dynamics (2010-2014) fall into this category. I revisit the puzzle from the perspective of the degree of co-holding and show around 40% of co-holders hold between 2 and 200 times more liquid assets than credit card debt. This new fact has implications for co-holding explanations based on liquidity. I propose an alternative explanation in which consumers value money and thus dislike making payments. This explanation has applications to a range of consumer choices, such as Buy Now Pay Later and the credit card premium. JEL Classifications: D11, D12, D14, G51 Full Text Additional Declarations No competing interests reported. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. 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Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-3845133","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":266060293,"identity":"1475e325-d546-4c0b-8c87-8e8bcbb02132","order_by":0,"name":"Carolyn St Aubyn","email":"data:image/png;base64,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","orcid":"","institution":"University of Reading","correspondingAuthor":true,"prefix":"","firstName":"Carolyn","middleName":"St","lastName":"Aubyn","suffix":""}],"badges":[],"createdAt":"2024-01-08 10:29:29","currentVersionCode":1,"declarations":"","doi":"10.21203/rs.3.rs-3845133/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-3845133/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":76880620,"identity":"74764796-8893-4ac3-838f-338fe65a6ae0","added_by":"auto","created_at":"2025-02-21 17:01:42","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":564612,"visible":true,"origin":"","legend":"","description":"","filename":"RevEcHH0501.pdf","url":"https://assets-eu.researchsquare.com/files/rs-3845133/v1_covered_3eb4ce83-b1e9-41fe-9c17-313a8f963aa8.pdf"}],"financialInterests":"No competing interests reported.","formattedTitle":"The Credit Card Debt Puzzle: New Facts and Theory","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":false,"hideJournal":true,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"","lastPublishedDoi":"10.21203/rs.3.rs-3845133/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-3845133/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eSimultaneously holding liquid assets and credit card debt is known as the credit card debt, or co-holding, puzzle. 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