Average credit card debt? Take your pick
What does the average Joe owe on his credit cards?
That would be $3,364.
Or $8,220. Or $4,878. Or $1,037. Or $2,720. Or $7,100.
AVERAGE CREDIT CARD DEBT:
BY THE (MANY) NUMBERS
In search of the average American's credit card debt, CreditCards.com turned to impeccable sources -- and came up with a multitude of credible numbers.
- $1,037, per card that doesn't carry a balance.
- $2,720, per U.S. adult with a credit report and Social Security number.
- $3,364, per person, resident U.S. adults.
- $4,878, per person, excluding unused cards, store cards.
- $5,047, per U.S. adult with credit card.
- $7,100, per household with credit card debt.
- $8,220, per card that usually carries a balance.
When it comes to credit card debt, that average Joe is one
All of the numbers above are from impeccable sources of
"average credit card debt" for Americans -- and depending on how it's
measured and who's doing the measuring, we're either doing pretty well when it
comes to managing our credit cards, or horribly.
"You think these things are simple, but they're more
subtle and complex than you imagine," said Ezra Becker, vice president of
research and consulting at TransUnion's financial services unit. His firm came
up with the $4,878 number, which includes actual amounts spent and reported to
the giant credit bureau, but which excludes unused cards.
The hunt for average
The complications stem from different ways of defining credit
cards, different ways of counting the card-carrying population, and the different
ways people use their cards. Finding the typical balance is like the parable of
the blind men identifying an elephant from the shape of its parts -- each observation
is part of a larger truth.
The Federal Reserve, which runs the national banking system,
is a natural place to start looking for the average credit card balance. The
Fed's monthly G.19 Consumer Credit report -- drawn from banks' lending reports
-- shows revolving debt of $807.5 billion in April 2013. Divided by the U.S.
adult population of about 240 million people, that comes to $3,364 each.
However, the revolving debt category includes bank loans and
finance company loans other than credit cards, and many people over 18 do not
have a credit card. Adjusting for the fraction of adults who do not have a
card, the per person balance is about $5,047.
The Federal Reserve Bank of New York tries for a more precise
look at credit card debt by excluding other types of revolving debt. The
average per person credit card balance in the U.S. was $2,720 in the first quarter
of 2013, according to its analysis.
What to leave out
A few asterisks follow those digits. In its population
measure, the New York Fed includes people who have both a credit report and a Social
Security number. That means some noncitizen residents who lack Social Security
numbers are left out, while other people who have a credit report -- but not a credit
card -- are counted in the total anyway.
TransUnion's estimate of
average card debt per borrower, at $4,878 during the first quarter, is fairly
close to the Federal Reserve's G.19 figure. The credit bureau leaves out cards that have gone
unused for long periods, and special purpose cards for a specific store or gas
station. These contribute relatively little to the total balance, Becker said,
while they inflate the card-carrying population.
"There are people out there that might not use their
card," he said. "I'm diluting that average balance by including a
bunch of zeros."
Another snag stems from the different ways people use cards.
Card issuers divide the world into two groups: "transactors" who use
their card for purchases and pay off the balance each month; and
"revolvers" who borrow on their card, paying interest charges month
to month. To pure transactors, the balances on their cards aren't really debts
at all, since any purchases will be paid off before interest charges are
To get a more focused picture of card debt, CreditCards.com
asked Experian to run an analysis separating the transactors from the revolvers.
Credit bureaus, with their detailed records on roughly 200 million U.S.
consumers, provide a rich trove of information for researchers. Even the New
York Fed, which can tap data directly from the banking system, uses anonymized credit
bureau files for its quarterly analysis of consumer debt.
Based on March 2013 credit card bills, the average balance on
a card that usually carries a balance was $8,220, Experian found. For cards used
just to make purchases -- and perhaps also rack up airline miles or cash back
-- the average monthly balance was much lower, at $1,037.
Shopping for rates
The drawback: These figures look at accounts, not
individuals. The same person may have several cards, with different payment behaviors
on different ones. So dividing cards into transactor and revolver camps is
possible, but the people who use the cards do not fall neatly into those
The same person "may have $10,000 on a zero-rate balance
transfer card, and make purchases on a high-rate card they're careful to pay
off," said Michele Raneri, Experian
vice president for analytics. They might even have a relatively low,
7 percent interest card for short-term borrowing, such as paying for a vacation,
As if looking for individual card debt weren't difficult enough,
it is only part of the picture. Many of us think of our finances as part of a
larger unit; the family or household. Then the question becomes, what does the
average family owe on their cards?
The question leads back to the Federal Reserve, which
produces a widely quoted study, the Survey of Consumer Finances. Every three
years the study interviews a sample of about 4,500 households, probing information
about family finances that is available nowhere else.
The family unit
For 2010, the survey found that the average card debt was
$7,100 for households that carry a balance --39 percent of all households. The family
at the midpoint of the range had a balance of just $2,600, indicating that the
average is skewed toward the high end by families that carry large balances.
However, the survey figures do not match up with the total
credit card debt. In fact, households admit to having only about half the card
debt that bank records show, a team of economists from the New York Fed found,
after looking at surveys from 2001 through 2007.
"[W]e find a substantial gap in credit card debt
reporting," said the economists in their 2011 report, "Do we know
what we owe? A comparison of borrower- and lender-reported debt." In the
survey, the person interviewed might not have a full grasp of the cards being
used by everyone in the family, the researchers said.
Leaving aside the hunt for average Joe, there are groups
that have their own experience with card debt that can be useful to know. People
seeking credit counseling in 2012 -- meaning they had hit financial
difficulties -- had nearly seven cards, on average, and unsecured debt of
$24,000, according to the National Foundation for Credit Counseling, based on
the experience of its member agencies. For this group, unsecured debt amounted
to 60 percent of their average annual income. Unsecured debt is chiefly credit
card debt, plus payday loans and other debts not backed by property.
For people entering Chapter 7 bankruptcy, the average card
debt was $17,700 back in 2000 to 2002, according to a study by the Executive
Office for U.S. Trustees. That would be about $24,000 in today's dollars,
according to inflation figures housed by the St. Louis Fed's FRED database.
Looking for the average card debt means making some choices.
"It depends on your philosophic approach to what you're measuring,"
Becker of TransUnion said, "and what you're trying to do with it."
: Experian, based on March, 2013 sample of credit reports looking at 24
months of payment history; Federal Reserve Bank of New York, based on
analysis of Equifax credit reports, first quarter, 2013; Federal Reserve
G.19 Consumer Credit Report, April 2013, and U.S. Census population
estimate, 2012; TransUnion; based on
credit report sample from first quarter 2013, excluding unused cards and
store cards; Federal Reserve G.19 Consumer Credit Report, April 2013,
and U.S. Census estimate of card users, 2012; Federal Reserve Survey of Consumer Finances, for 2010;
See related: Credit card statistics, industry facts
Published: July 8, 2013
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