There’s a gender payment gap when it comes to plastic.
Men and women use their credit cards for different purposes, according to a new study from researchers at American University, Hood College and McDaniel College in Maryland.
The researchers analyzed the Survey of Consumer Finances, which is conducted by the Federal Reserve, to determine how people feel about their debt. They looked at the responses of men and women, between the years 2004 and 2013, who had never been married.
“Everybody is pretty accepting of the idea that you can use credit to smooth your consumption,” said Mary Eschelbach Hansen, an author of the study who is a professor at American University.
See also: Americans are actually doing a good job paying their debts right now
But there are some notable gender differences. Women are less likely to say it’s OK to use a credit card for luxury purchases, the researchers found. In fact, a woman who has been unemployed is about twice as likely as a man in a similar position to say borrowing for luxuries is a poor decision. The women surveyed were 6% more likely than men to say it’s OK to use debt for living expenses.
Overall, women are more financially vulnerable
One theory: During the Great Recession, women lost their jobs earlier than men did, and declining tax revenue hit women harder because they were more likely to work in the public sector or receive public benefits. Women also seemed more likely to receive subprime loans for their mortgages.
When they observed the fallout from the Great Recession, women saw the negative effects on other women. Seeing others who were like them use credit to bridge a gap in income reinforced their feelings that it’s acceptable to use credit for that purpose, the researchers said.
Women in general tend to be more financially “vulnerable” since they often make lower wages, Hansen said. They may, as a result, be more used to using credit cards in tough times, and they have likely observed other people they feel similar to, doing this.
Other key financial differences between men and women
Previous studies have shown that women invest in less-risky assets than men do and they feel more burdened by debt when they have it.
Men carry more debt than women: $26,227 compared to $25,095 for men, according to the credit agency Experian
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Men are also more likely to have larger mortgages: $187,425 compared to $178,140 for women.
Three years after graduation, 44% of men have paid their student loans off, compared to just 33% of women, according to the American Association of University Women, a nonprofit.
Women on average have more open credit cards than men do, according to Experian: Women have 3.7 each on average, compared to three for men. Women also have higher credit scores, 675 compared to 670 for men. And men tend to have about 50% more in their retirement savings accounts than women do, according to Vanguard.
Source : MTV
