Physical and Psychological Toll of Credit Card Debt: An Investigation of the Mediating Pathway
Drawing on the abundant literature of ‘SES gradient of health' and the theoretical framework of ‘stress process', this study proposes two major research hypotheses: (1) carrying credit card debt has a significant and stronger adverse impact on physical and psychological wellbeing than carrying other types of debt, even after adjusting for socio-demographic and socioeconomic backgrounds; (2) it is more likely for carrying credit card debt to be associated with higher level of physical dysfunction through increase in psychological distress, than to be linked to greater psychological distress via growing physical dysfunction. Findings based on "2007 Taiwan Social Change Survey (Round 5, Year 3): Social Stratification" support both hypotheses.First of all, when debt had nothing do with credit card outstanding balances, it was positively predictive of psychological distress only to a moderate extent, but it was not associated with significant gain in physical dysfunction. However, the debt-health relationship was significant and much stronger in terms of both physical and psychological dimensions when any part of the debt was accrued on credit cards. Secondly, the mediation analyses revealed that debt without credit card outstanding balances was barely related to elevation of physical dysfunction given limited increase in psychological distress. On the contrary, the relative indirect effect of credit card debt on physical dysfunction through psychological distress was both strong and significant (relative to no debt at all as well as other types of debt). Alternative models indicated that the relative indirect effect of credit card debt on psychological distress through physical dysfunction failed to reach statistical significance. Implications for future research and public policy are then discussed in detail.