90% Of Households Think They Carry Average Or Below Average Amount Of Debt…

A CreditCards.com survey found that 90% of respondents thought their household had “average” or “less than average” amount of debt.

I equate it to sex surveys, which are notoriously inaccurate because people won’t own up to how they actually behave,’ says Farmer [CreditCards.com VP of Marketing]. ‘There’s a high level of denial.’ The other possibility: Ten percent of the population has huge revolving balances that skew the numbers higher…

…The survey based its number — $9,300 per household — on a figure published by CardWeb.com, which divides the outstanding revolving debt by the number of households with credit cards.

We think most of the respondents are either lying or are misinformed, part of the reason there’ such a debt problem to begin with. Either that, or the survey must have drawn its population entirely from Lake Woebegone.

Five Credit Card Traps to Avoid [Yahoo Finance]

(Photo: Getty)


Edit Your Comment

  1. winnabago says:

    90% of people would also say they are average height, average IQ, average education, etc.

    It’s all in how you ask the question.

  2. banned says:

    I think it shows just how stupid people really are. I’m sure thses were the same 90% who thought invading Iraq was a good idea!

  3. enm4r says:

    Link to survey?

    I’d imagine that if it were online at a finance site, the numbers would obviously be skewed because the largest offenders wouldn’t be reading finance websites…

  4. B says:

    Of course, it is possible that 10% of the population holds 50% of the debt.

  5. CumaeanSibyl says:

    If the average amount of debt is $5000 (just to pick a number), then can you count people who have anywhere from $4000-$6000 in debt as being “average” — in other words, what’s the deviation? And if someone with $4000 reports being “below average,” while the guy with $6000 reports being “average,” does that count as inaccurate reporting or is it just a matter of how people judge statistical categories?

    Obviously, most people don’t know offhand what the average amount of debt is, but at the same time, it’s possible for there to be a large number of people (even a majority) having “average” debt, depending on how you define that category. It’s those “below-average” folks I’m suspicious of.

  6. Godz says:

    What is average debt?

  7. RTFMate says:

    Maybe my parents just raised me differently… but Wow.

    The only time I carried any month/month debt was a 6mth 0% financing for new appliances when I bought my house.

    Other than that If I don’t have the cash to pay it off at the time of purchase then I don’t need to buy it.

    Which leads to me to a question.

    Does anyone know of a good website where I can read about good percentages to put into cash savings.

    Currently I only have a mortgage payment. Car/Motorcycle are both paid off.

    So with the additional cash that I was spending on that motorcycle payment. I’ve started applying to the the principal in my home. While it is a decent use of cash and I also have the 6mth(emergency no job account).

    Should I be saving more cash or filling out my IRA. Currently I put 12% of my income in my 401(k) and my IRA remains fairly neglected maybe $1500-$2000 a year of putting money in.

    Advice thoughts?

  8. bobskedeet says:

    Of course you carry debt! Do not make the statement that you carry no debt. You have a mortgage. You have BIG debt with a mortgage depending on your location. That said, most people consider a mortgage to be “good” debt rather that credit card “bad debt”

  9. anatak says:

    Last time I checked:
    Average consumer debt is ~$38,000
    (Cars, CCs…not mortgage, unsure if student loans fits in there)
    Average debt on credit cards is ~$8000

    While its fun and usually easy to get data from self-reporting, as the post notes, it is prone to terrible results if you want the truth. Where this method shines is getting people’s perception of the truth. And you’re looking at it. This is all about what each person views as average and possibly more like what they view as manageable. That can cover quite the range of debt.

    Another fun stat, and I may have garbled the numbers over time:
    67% of American’s live paycheck to paycheck
    55% say they ‘always’ or ‘sometimes’ worry about money

    Leaving that 12% on … prozac?

  10. j-o-h-n says:

    @RTFMate: You appear to be doing better than the vast majority of people.

    I’m putting 15% into my 403b (like a 401k).

    Like you I am pouring extra money into my mortgage (so it will be paid off when our oldest is in 12th grade 4 years from now, then that money will go toward tuition).

    I am very handy and so tend to keep vehicles a long time (an ’87 and a ’98) so I am not currently saving anything toward a new vehicle — if this is not the case for you, you might want to put some money into something more liquid than your mortgage for when you want to replace your vehicle.

  11. anatak says:

    Nice work!

    with your extra take home pay:
    >max the 401k up to the match
    >max a roth ira out
    >then go back and max out the 401k above the match
    do that until you hit 15% of your income

    >start the college fun (if you have kids)
    >pay extra on the house until payed off
    >then look at other investments, like real estate

    Oh, and in with it all be sure you are giving as well. Church, charities… which ever, but that should be around 10%.

    Once again, you’re doing great.

  12. crnk says:

    “Meanwhile, more than 9 in 10 Americans don’t know how long it would take to pay off their credit card bill if they made only the minimum payments. Asked how long it would take to wipe out a $1,000 charge, 55 percent underestimated the actual time of 7 to 8 years; 31 percent overestimated; and 7 percent didn’t know.”

    hmmm. something sounds a little fishy here…..maybe they don’t have all the information…..or even if they did, here is a survey question i propose:
    if you take a loan for a house of $200k, at 5% interest and 30 years, what should the monthly payments be?
    First, many people rent, so they don’t care
    Second, most people are on vastly different terms than that, so they don’t really have a reason to know.
    Third, that is quite a bit of math for someone to calculate out on a simple survey.

  13. RTFMate says:

    Thanks for the thoughts everyone. That does give me a good direction and some ideas.

    I have been storing a little bit for the car. I’m not overly technically but I can do a lot of basic tasks and never skip on the routine maintenance including radiator flushes and transmission fluid changes. I’m still driving an “old” 1995 with 188k miles on it. She runs great and when she dies I have the substitute car already picked out. Go Honda Fit.

    I do have a question about the 401k vs IRA.
    I am exceeding the company match but what is the advantage to filling out the IRA instead of using the pre-tax of the 401k. I am putting it into a pre-blended and adjusting stock. Such as the Fidelity 2040. So what is the advantage? Both would have fees if I withdrew the money.

    Since I’ve already purchased my house I wouldn’t even be allowed to tap the IRA(as if I would) for a down payment.

    I’m still young, 26 unmarried. So obviously I want to maximize my investments now, so when I wed and we have kids(God willing) I can spend time with them and not be stressed.

  14. skittlbrau says:

    @RTFMate: The benefit to IRA is if you are eligible for a Roth IRA, you can tax diversify by paying taxes up front on a portion of your nest egg. This is a particularly valuable benefit when you are young, as you are likely making less now (and paying a lower tax rate) than you will be when you’re 35 or 40. Besides, once you get married you may no longer be eligible for a Roth.

  15. @rocnrule: I think it’s the same 90% who think they’re above-average drivers!

  16. RTFMate says:

    Thanks BAA, J-O-H-N and Anatak

    Time to break out Excel and figure somethings out.

  17. AcidReign says:

        There’s NO WAY average household debt is $9000, if mortgages are included!

        Including my mortgage, my debt is about $50,000. Take out the mortgage, and I owe absolutely zero.

        Right now, the tax situation when you withdraw from a 401-k is better than withdrawing from an IRA. There’s this little 20-year averaging thing with the 401-k, that should make the taxes less. Both are great ways to save. Anything that puts off paying taxes is to your benefit. Money has time-value, or so said my economics profs.

        I do know a couple of people who save for retirement, and pay all of their taxes now. They don’t trust the US government not to change the law and tax the crap out of IRA’s and 401-k’s, when the number of retirees gets out of hand in a couple of decades!

  18. B says:

    @AcidReign: It’s credit card debt only.

  19. @enm4r: That’s what I was thinking. Even if they did it by phone or a mailing would someone facing foreclosure or bankruptcy really want to discuss their personal finances in a survey (even if it’s in general)?

  20. SadSam says:

    A more interesting survey question would be – do you know the current level of credit card debt you are carrying? I bet 80% of the general public has no idea.

  21. Jacquilynne says:

    How is total revolving debt divided by households with revolving debt a valid way to calculate average debt? You’ve just whacked off an entire end of your scale–the people who don’t have credit cards at all, and thus carry no debt on them. Average debt amongst households with debt is not nearly as sexy sounding, I suppose.

  22. anatak says:


    Glad to help. Make sure you are looking into a ROTH Ira. Those four letters will give you tax-free growth. Think about that – you pay taxes now (on the contributions), so that you are not paying taxes on the gains you’ll pull out at retirement (millions).

    Great job at 26.

  23. riggs says:

    @RTFMate: My advice would be the following-(we’re in a similar situation…I’m 28, unmarried, no dependents)
    1)Set aside 3-6 months worth of income as an emergency fund, if you haven’t already.
    2)Set up a Roth IRA (assuming that your income is under the $95,000 max AGI for an individual), and contribute as much as you can (up to $4,000 annually).
    3)If you want some liquidity, consider opening a money market account with check-writing privileges.
    4)Keep doing what you’re doing-no “bad debt.” You’re definitely on the right track!

  24. kamel5547 says:


    He never said he carries no debt….


    Cash has notoriously low retuns, you might be looking at a higher percentage through an online bank (ING for example), but even then youa r eonly looking at 4.5% or about 1.5% after inflation… depending on your risk tolerance and when you expect to need the money you may want to consider mutual funds. Or even short term CD’s (12 months, 5.35 or so at ING again).

  25. Chicago7 says:

    This is like Lake Woebegone, MN “where all the children are above average”


  26. nequam says:

    The advice being shared in this thread is an example of Consumerist readers at their best. So much better than the iPhone wars.

  27. krunk4ever says:

    Like many others, I just think the survey question was conducted poorly. How is average defined here (mean, mode, median)? If we’re using the mean, then as B said earlier, it could be quite possible that 50% of the debt is held by 10% of the people.

    Also, carrying over the average amount of debt is not a bad thing as this blog post would make you believe. Just by getting a mortgage to buy a house, you’ve probably exceed the average amount of debt no matter how well you were raised [in reply to RTFMATE].

    It’s when you carry a debt that you have a hard time paying back or really no way to pay back that is bad.

    I personally think a survey asking people if their debt increases every month or decreases everything would be a much better poll.

  28. Rusted says:

    @RTFMate: Depends on the interest rate of your mortgage vs the percentage you are getting back in your investments. I have no mortgage but if I did, it would probably be around 8 percent and my 401K is currently perking along at 6.1 (Too much TWX stock, really need to trade it off).

    No debt myself. Been there, done that, no fun.

  29. Rusted says:

    Oops….mortgage rates currently at 6.3 for 30 year fixed according to Bankrate.

  30. zolielo says:

    Other than student loans I am debt free. I could pay those off too but taxes, job matching, and higher yield elsewhere makes paying it off not that enticing.

  31. RTFMate says:


    My 30 year fixed is 5.6%.

    The basic reason for paying extra into the principal was to get to the point where I could get the PMI removed from it. PMI the ripoff insurance…. The bank says for an early pre-20% removal. They have to order an appraisal of the property, but the stipulate in there says I need a 75% of less Loan to Value.
    So I’ve been attempting to chop of the principal so I don’t waste $300 on an appraisal, plus if the appraisal comes in lower than my accessed tax value then I can protest that and save on both ends.

    As for my investments, this year they have returned a bit over 10%, but that is a severe drop from the 19.8% average for 12mths.


    You are correct, no matter how well you are raised you will run over the debt when the mortgage is factored in and the ability to pay without becoming stressed or entering an endless borrowing cycle is crucial.
    I came from a simple blue collar family, they never lived out of their means and I never learned to.

    I’m glad I finally asked a question in a thread it has been a very productive day.

  32. Geekybiker says:

    Fun bit about asking people to self rank is that the worse a person is at something, the more likely they are to rank themselves higher than they really are. This is even if they are being honest. People who are bad at something (money, driving, etc) just dont see the errors they make and assume since they dont see errors they are better than they really are. People who are really good at something conversely are more likely to rate themselves lower than they really are since they *DO* see they errors they make .

  33. crnk says:

    My parents had a different house about 15 years ago, and they told me to NEVER do the PMI because the bank will make up any BS they can to “prove” you haven’t paid off more than the 20% value of the home. Expect to fight a hard battle against them. They’ll pull out every trick in the book–depreciated value, invalid appraisals, etc and do anything they can to keep the PMI flowing in.