# credit cards The Truth About Credit Card Debt

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Recently we noted that 90% of American households thought they held average or below average levels of credit card debt. This made us think that Americans were in denial when it came to their credit card debt since "90%" and "average" simply don't mix.

Recently we noted that 90% of American households thought they held average or below average levels of credit card debt. This made us think that Americans were in denial when it came to their credit card debt since “90%” and “average” simply don’t mix.

But there’s a different (and more likely) explanation. The survey that reported these results calculated its average credit card debt number — \$9,300 per household — by dividing the outstanding revolving debt (including business and consumer debt as well as balances that are about to be paid off) by the number of households with credit cards. Turns out the \$9,300 per household is way off:

“The majority of U.S. households have no credit card debt, according to the Federal Reserve’s latest Survey of Consumer Finances. About a quarter have no credit cards, and an additional 30% or so pay off their balances every month. Of the households that do owe money on credit cards, the median balance was \$2,200 — meaning half owe more, half less. Only 8.3% of households owe \$9,000 or more on their cards.”

Inject bad math into a survey question and it’s easy to see where the problem arises.

“Roper used the bogus figure in a poll question, saying: ‘Some statistics say that the average person has \$9,300 in credit card debt. Would you say you have more credit card debt than the average person, less credit card debt, or are you just about average?’ So you can see that the respondents’ answers weren’t delusional or deceptive. They were perfectly understandable because more than 90% of the respondents likely do have less than \$9,300 in credit card debt.”

A couple learnings here:

1. Don’t believe everything you read. Companies have agendas when they release surveys — even if it’s reported on by Yahoo, a generally trustworthy financial source. Seems like we should have remembered that one.

2. If median credit card debt is really only \$2,200, then it’s not nearly the problem it’s been made to be, right? And yet articles, news reports, surveys and the like continually tell us the opposite. To resolve this disparity, refer to item #1 again.

The big lie about credit card debt [MSN Money]

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