The Big Lie About Credit Card Debt
Sep 1st, 2007 by Afiya
From LaToya Irby,
Your Guide to Credit / Debt Management.
A recent survey conducted by GFK Roper Public Affairs holds that the average American household has over $9,000 in credit card debt. The survey also reveals that 90% of respondents say they have less than the average amount of credit card debt.
The survey analysis alludes to the assertion that Americans are deceiving themselves or even flatout lying about the amount of debt they have. But who’s really lying?
An article on MSN Money quotes these statistics:
- The majority of U.S. households have no credit card debt, according to the Federal Reserve’s latest Survey of Consumer Finances. About a quarter have no credit cards, and an additional 30% or so pay off their balances every month.
- Of the households that do owe money on credit cards, the median balance was $2,200 — meaning half owe more, half less.
- Only 8.3% of households owe $9,000 or more on their cards.
If you remember averages from grade school math, then you know that it only takes one abnormally high number to skew the average. So, if 9 out of 10 households each have $1,000 in credit card debt and the 10th has a whopping $81,000 in credit card debt, the average debt per household is indeed $9,000. And yes, 90% of the households could truthfully answer that their debt is less than average.
So maybe it’s not consumers who’re lying about how much credit card debt they have after all.
Don’t let statistics fool you. The dollar amount of credit card debt is a good measure, but says nothing about your debt overload unless it’s compared to your income. Two people with the same amount debt but different incomes will likely have different financial lives. Your debt-to-income ratio is the best indicator of your financial standing as it relates to debt.
federal estate taxes…
Very interesting post. A little bit confusing, but still ok….