May 26, 2008

Results, Poll #18, CC Debt.


[remember these old things?]

I went onto Google to find a bit of background info for this post. I wanted to find out what an American's average credit debt amount usually is - this took a little bit of time, finding very easily that it's said to be about $8-9k. However, this figure is tossed out only by dividing America's total credit debt amount by the number of American's holding credit cards... not really the best average, or representative of normal folks. Googling a little deeper (that's what she said), I found these statistics, which came from much better reasoning (imo) -

  • Only 29% of households owe $1,000 or more on their cards.
  • 21% owe $2,000 or more.
  • 6% owe $8,000 or more.
  • 4% owe $10,500 or more.
  • 1% owe $21,400 or more.
About 55% of all households pay off their CCs monthly and do not carry a balance. Of those remaining people (~45%) that do not pay off their card(s), the median balance is roughly $1,900. This seems a lot better/believable than $8-9k.

And here's the results from my poll:

> 1 person (7%) chose "$1-999" - stay low, pay it off!
> 0 people chose "$1000-2499"
> 2 people (14%) chose "$2500-4999" - uh-oh, leave 'em at home!
> 1 person (7%) chose "$5000-7499" - put 'em in the freezer!!

> 0 people chose "$7500-9999"
> 1 person (7%) chose "$10,000+" - cut them all up!!!
> 9 people (64%) chose "None" - show offs.

All in all, t.c readers are ahead of the curve that America's drawing with spending habits. This is good news. And to all of you with no CC debt, I hate you (ok, not really).

3 comments:

Anonymous said...

Hmmm, even those google stats are very misleading. According to an economic theory called the "permanent income hypothesis" that won some guy a Nobel prize once, consumers engage in what is called "consumption smoothing," meaning that they borrow when they're our age and pay it off when they're older and make more money. So younger adults tend to owe a crapload on their CC, on average. I also heard a story on NPR late last year that talked about how people don't tend to admit how much CC debt they have, even when asked in surveys that say that they are anonymous. They know this because they conduct random surveys and then compare it to the data reported by revolving credit organizations, and the data is always way off. Thus, I strongly suspect bias in your data as well.

Oh, I recall this story on NPR also... the interesting part about the Financial Times columnist's experience w consumption smoothing comes at around 5:45. It made me giggle, imagining I could send $10 back to our past selves at UIUC.

-t

.mk. said...

You callin t.c readers liars!?! I never!

Consumption smoothing makes sense, but I'm pretty sure CC card companies know that many Americans purchase way more than they can pay back, esp not before incurring tons of finance fees. I mean, $20k+ of credit card debt... yeah, that'll take your whole life to pay back alright. "If I can just make the monthly payments, I'll be fine."

Anonymous said...

I guess maybe those stats aren't that surprising. I was thinking about my earlier life, when I financed quite a bit of Northwestern and 9 months of unemployment, and had some kind of serious balances, but frankly payed them off pretty quickly. So perhaps that was more short-term consumption smoothing. And I think most of the people reading t.c are maybe at a point in their life where they are a few years beyond that kind of nonsense, so that they're into the savings phase of consumption smoothing. I keep forgetting we're not 24 anymore.

-t

transplanted.chicagoan

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