Credit Card Debt

[Brdofpray]

I figure this board would be able to answer my question. I was reading an article recently about the average American household debt. They were quoting a figure, a little north of $16,000. My question, if I pay off my credit card each month, does my balance figure into this debt average?

[ExFlyBoy5]

Quote:

Originally Posted by Brdofpray I figure this board would be able to answer my question. I was reading an article recently about the average American household debt. They were quoting a figure, a little north of $16,000. My question, if I pay off my credit card each month, does my balance figure into this debt average?

I would guess that if you have a balance of any kind then it would be reported as such. I would say that the numbers "$16,000" are pretty useless except for generating a "newz" story.

[GrayHare]

Quote:

Originally Posted by Brdofpray I figure this board would be able to answer my question. I was reading an article recently about the average American household debt. They were quoting a figure, a little north of $16,000. My question, if I pay off my credit card each month, does my balance figure into this debt average?

Probably not. The $16,000 number is likely the average of only those who do not pay the balance every month.

[Sunset]

Without reading the article, average American household debt. could also included mortgages, car loans, student loans, etc...

So a useless number.

I read once, about 50% of CC holders pay off all their monthly balance.

[Brdofpray]

I think that was exactly the purpose of that figure. It just got me thinking, which, produced the question.

[Brdofpray]

Quote:

Originally Posted by Sunset Without reading the article, average American household debt. could also included mortgages, car loans, student loans, etc... So a useless number. I read once, about 50% of CC holders pay off all their monthly balance.

I apologize, the article was talking about credit card debt only. I should have specified..

[MichaelB]

If the source of the report is a credit agency, the CC balance is not end of billing period but point in time, so it would include the unpaid balances of cardholders that pay the full balance each month.

If the source is the NY Fed, it includes all household debt and is a statistical projection.

[RunningBum]

Not trying to be too snarky, but most of us here aren't too concerned about the finances of the avg American household. Maybe I'm wrong, but when I see stuff like this, I write it off as not applicable to me.


It'd be a guess for any of us to tell you what that article meant from a small and fairly vague snippet. A link to the article or stating the source would be a start. Better yet, why don't you contact the author directly yourself?

[W2R]

(Edited to add: RunningBum beat me to the punch while I was typing this out. +1 to everything he said.)


I would guess that most of us here do not maintain much of an unpaid CC balance compared with the average American.

AVERAGE AMERICAN: In my perception, most Americans can't afford to retire (yet) and instead, they are living paycheck to paycheck. Sometimes/often they don't have the money available to pay off their CC debt each month.

AVERAGE ER FORUM MEMBER: I know what people say in their posts, and they seem to be doing much better than the average American. As for me, I am doing fine also, and I pay off my (one) CC every month automatically. This is something that I demand of myself. Beyond that, I don't get a big thrill out of comparing with unfortunate folks who aren't in my financial situation. Been there, done that, got the t-shirt and mountains of debt which are now paid off. Never again.

[Brdofpray]

The article is irrelevant. I just asked a question about how credit card debt might be calculated.

Thank you MichaelB, for your answer.

[exnavynuke]

type of debt	TOTAL OWED BY AVERAGE U.S. HOUSEHOLD CARRYING THIS TYPE OF DEBT	TOTAL DEBT OWED BY U.S. CONSUMERS
Credit cards	$16,061	$747 billion
Mortgages	$172,806	$8.35 trillion
Auto loans	$28,535	$1.14 trillion
Student loans	$49,042	$1.28 trillion
Any type of debt	$132,529	$12.35 trillion

According to what I could find, the debt numbers are from the Federal Reserve and are calculated for household based on Fed Reserve info and US Census Bureau data (where applicable). So the $16k only counts households carrying credit card debt, not the average of every household. In February of this year there was an article that included all households and the average was just shy of $5k when all households were included in the calculation.

[Senator]

Quote:

Originally Posted by RunningBum Not trying to be too snarky, but most of us here aren't too concerned about the finances of the avg American household. Maybe I'm wrong, but when I see stuff like this, I write it off as not applicable to me.

I think it is relevant, to a degree. At some point, somehow, you and I will be asked to pay for this debt...

[Koolau]

Quote:

Originally Posted by MichaelB If the source of the report is a credit agency, the CC balance is not end of billing period but point in time, so it would include the unpaid balances of cardholders that pay the full balance each month. <SNIP>

And when we last applied for a mortgage, the banker pointed out that we could raise our credit score (only in the low 800s) by pre-paying our credit cards (sending money as a credit before charging) because the credit agencies count debt vs available debt against EVERYONE - even those who pay it off at the end of the month. I guess even after doing that for 35 years, one might NOT pay it off the next time. Seemed a bit strange, but supposedly can make 10 to 20 points on the credit score. Who knew? (Oh yeah. Probably most of the folks here - but not me a few years ago.)

[mickeyd]

$12.35 trillion debt by fellow US citizens...and NONE of it is mine!












Sweet!!

[Walt34]

I think this is the article that news agencies are reporting on: https://www.nerdwallet.com/blog/aver...ebt-household/

It seems that they are only counting those CC holders that carry the debt month to month and not those like most on this board that pay it off every month.

Still, the numbers are high when one considers that the average household income is (I think) about $52k a year.

[exnavynuke]

Quote:

Originally Posted by Walt34 I think this is the article that news agencies are reporting on: https://www.nerdwallet.com/blog/aver...ebt-household/ It seems that they are only counting those CC holders that carry the debt month to month and not those like most on this board that pay it off every month. Still, the numbers are high when one considers that the average household income is (I think) about $52k a year.

It's also an "average" and not the median debt. So people with 100k on their cards are being averaged in with people who have $4k.