Abstract
The credit card debt puzzle is not well understood. Households exhibit inefficient behavior when they have sufficient liquid assets to pay off their credit card balance, but do not. Based multinomial regression analyses of the 2016 Survey of Consumer Finances, the study discovered that households that display this behavior are more likely to have lower financial literacy than convenience users. The findings suggest financially literate households are less likely to display irrational behavior regarding the credit card debt puzzle.
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