We use the 1979 National Longitudinal Survey of Youth to revisit what is termed the credit card debt puzzle: why … consumers simultaneously co-hold high-interest credit card debt and lowinterest assets that could be used to pay down this debt … complete picture of households' balance sheets. Relative to individuals with no credit card debt but positive liquid assets …

repayment difficulties, yet typically does not result in eventual default; whereas borrowers who face repayment difficulties … that are likely driven by economic shocks face a high probability of default. …

default rate and loss given default of bank loans share a cyclical component, related to the business cycle. We infer this … cycle by a new model that distinguishes loans with large and small losses, and links them to the default rate and macro …