Financial Advice Blog

Everyday people hear about how all Americans owe thousands of dollars in credit card debt. These rumors are distributed through the media, government, bank officials, and many other people. They all say the same thing. That a trend is growing of Americans increasing in credit card debt. However if you break down the statistics that everyone talks about you can see the truth about credit card debt.

There’s a statistic that claims the average American carries more than $8,000 in credit card debt. This statistic is widely believed because of its publicity. However the fact is that the statistic itself is skewed in the way it was found. The average American is conceived of as having kids and living in a multiple bedroom house with a basement. We can see that the word average can easily confuse a person about what it really means.

Only 1 in 20 American households actually carry $8,000 or more in credit card debt. The truth about credit card debt is that most American families actually owe nothing to credit card companies. This is because most of them don’t have credit cards or pay off the bill in full. Out of the households that do owe credit card companies money, most of them only owe $2,000 or less. It’s clear that an average can’t give you the real answer to how much credit card debt the American people have.

You may be curious why this is. In reality it’s very simple. It’s due to how they came up with their number for the average American’s debt. They took the outstanding credit card debt that is owed which is $750 billion and divided it by the number of American households that have a minimum of 1 credit card. This is approximately 84 million households. Thus they arrived at $8,000 per household.

However this number is very deceiving as they didn’t even factor in the number of Americans that don’t have credit cards. By doing this they eliminated 23.8% of American households in their calculations. This is a huge factor if you’re trying to get the average American credit card debt for all Americans. Another 31.2% of American households pay off their bills as soon as they get them. Thus altogether 55% of all American households owe no credit card debt.

Out of the 45% 29% have $1,000 or more in credit card debt, 21% of households owe $2000 or more, 4% owe $10,000 or more, and 1% owe $21,000 or more. These numbers show that 26% of the American people carry all of the debt that is owed for debt that is $2,000 or more. American households owe very little to credit card companies. Most of the households that due have credit card debt have less than $1,000. The truth is that most of the American people are not in credit card debt and nowhere near the rumored numbers.

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