Over the years I’ve tried to develop the habit of automatically double-checking any received wisdom I hear, especially if I’m tempted to embrace it in my own thinking. A good example came along this morning, when I read this comment on a weblog:
I have heard that the average credit card debt in America is somewhere in the $15K range which is just mind boggling.
Now, I don’t intend to embarrass the fellow who made this comment; I’ve heard similar things in passing, I think credit card debt is a big problem too, and I may very well have made such a comment when railing against it. But I’ve trained myself to watch for phrases like "I have heard" appearing in the same sentence with numbers and dollar amounts, both in my writing and in the writing of others, and when I see them I try to do a quick check (usually an internet search) to see if the number is accurate.
When I typed "average credit card debt" into Google this morning, the very first item on the search list was an article called "The truth about credit card debt." The article is short and worth reading. As to the figures bandied about (the usual claim is $8000), it says:
The surprising thing about this statistic isn’t that it’s so widely known. Rather, it’s that the statistic paints a picture that’s just plain wrong.
- In reality, most Americans owe nothing to credit card companies.
- Most households that carry balances owe $2,000 or less.
- Only about 1 in 20 American households owes $8,000 or more on credit cards.
These figures are from the Federal Reserve’s 2001 Survey of Consumer Finances, one of the most comprehensive assessments of what Americans own and owe. (The survey is updated every three years; a summary of 2004’s results will be published in early 2006.)
Well, that is a bit of a surprise. Even better, I don’t have to take the writer’s word for it; there really is a Federal Reserve Survey of Consumer Finances, and it is trivial to find it on the internet. I did so, and was glad to see that it was the new summary (covering 2004 results). Here are the more recent figures, taken from this summary article:
- 75% of American families have credit cards.
- Of the families with credit cards, 58% carry a balance (meaning that 43% of American families carry a credit card balance).
- The median balance is now $2,200, up from $2,000 in 2001 (median means that half the families with balances carry less than $2,200 and the other half carry more than $2,200).
- The mean (average) balance is $5,100.
So a more accurate (and less impressive) description of credit card debt would be to say that 57% of Americans owe nothing to credit card companies, 22% owe $2,200 or more, and 5% owed more than $8,000 in 2001 (I couldn’t find the 2004 figure for this).
It probably took me five times longer to write this post than it did for me to locate and digest the information in it. I hope you find it useful, and I hope it encourages you to do some of your own double-checking on received wisdom.