When it comes to credit card debt, especially with the passing of the CARD Act, there have been a lot of statistics flying around. I wanted to find a authoritative source, in this case the Federal Reserve, and see what the real numbers are.
One of the tricky things about averages is that it’s hard to make an apples to apples comparison. If you’re 25 and have $5,000 in credit card debt, is that good or bad? It’s certainly worse than having no credit card debt, but what if you’re responsible for providing for a family? A single person with $5,000 in debt is “worse” than a family with $5,000 in debt, all in one person’s name, right? It’s questions like these that make the whole “average credit card debt” question, and others like it, so tricky.
Despite these difficulties, it’s still valuable to understand what the average is as well as what the various trends are. If nothing else, it’s fun too right? 🙂
Average Household Credit Card Debt
The Federal Reserve publishes a Survey of Consumer Finances every three years, the last Survey of Consumer Finances was done in 2007 , and is updated based on inflation data every year. According to that report, the median household credit card debt was $3,039.70 in 2007. That doesn’t seem that bad right? Well, that’s the average when you include every household, even the ones without a single credit card. In 2007, only 46.1% of households carried a balance, which is a statistic I was surprised to see given all the talk about credit card debt (that may have been changed given the economy). When you include only families with credit card debt, the mean goes up to $7,300.
The fun part about the statistics is in the “other” types of information it reveals. For example, the vast majority of credit cards are bank credit cards. Of families with credit cards, 96.1% have a bank issued credit card. 56.7% have one issued by a store, such as Macy’s. Only 11.9% have a gas credit card.
OK, that wasn’t really that interesting, but this next part is.
Average Debt by Household Income
This is the median credit card balance based on the percentile of income:
- Less Than 20th Percentile: $855.30
- 20th – 39.9th Percentile: $1,896.20
- 40th – 59.9th Percentile: $2,632.20
- 60th – 79.9th Percentile: $3,103.90
- 80th – 89.9th Percentile: $4,573.50
- 90th – 100th Percentile: $6,303.40
Isn’t it surprising to see that the highest earnings have the highest median credit card balance? Now before you say that high earnings are just high spenders, if you look at the median values based on percentile of net worth, you see a similar, but not quite so pronounced, trend:
- < 25th Percentile: $3,042.40
- 25th – 49.9th Percentile: $2,491.70
- 50th – 74.9th Percentile: $2,843.50
- 75th – 89.9th Percentile: $3,846.70
- 90th – 100th Percentile: $4,999.30
The amazing part of these two statistics is that someone in the 90th to 100th percentile in income or in total net worth would still have credit card debt of just a few thousand. $5,000 – $6,500 in credit card is serious business to most people, but if you were in the 90th percentile… you would think that it’s small potatoes and something you’d get rid of just to be rid of it?
Average Debt by Age
Finally, before we go, we had to pull out the data for average credit card debt based on the age of the head of household. These results were not as surprising (to me anyway):
- Less than 35: $3,033.70
- 35–44: $3,277.10
- 45–54: $3,460.70
- 55–64: $2,939.50
- 65–74: $2,046.30
- 75+: $1,020.90
I love trying to guess relationships when ones probably don’t exist. I wonder if the decrease over age has to do with values about debt or concerns about retirement? I know older generations tend to shun debt and emphasize frugality, the Great Depression certainly played a role in that, but which of the competing interests dominated decision making?
Average Debt by Education
OK, OK, just one more. 🙂 This is the data based on the education of the head of household.
- No high school diploma: $2,277.60
- High school diploma: $2,611.90
- Some college: $2,946.50
- College degree: $3,873.90
The more education you have, the higher your average credit card debt! You would think that the more educated you are, the more you’d understand how credit card works but it appears another factor comes into play. As the cost of education increases, students are turning towards more student loans and relying on credit cards to help pay for things like room, board, books, and tuition . The article is from 2009 and the data is from 2007, but I still think the argument holds a measure of truth.
What did you think of all this data? Anything surprise you? Anything not surprise you?