Personal Finance

Measuring average credit card debt

What does the average Joe owe on his credit cards?

To define the average American's credit card debt, turned to several sources -- and came up with several numbers.

The average credit card debt is:

  • $1,128 per card that doesn't carry a balance.
  • $1,674 per account, U.S. adults with a credit report and Social Security number.
  • $3,766 per person, resident U.S. adults.
  • $5,232 per cardholder, excluding unused cards, store cards.
  • $5,540 per U.S. adult with credit card.
  • $7,494, per card that usually carries a balance.
  • $9,600, per household with credit card debt.

When it comes to credit card debt, that average Joe is one elusive fellow. That's largely because credit card users don't all fit neatly into one group. Some carry debt, some don't. Some measures include retail cards or inactive cards, some don't. And looking at household debt versus individual debt versus per-card debt all give sharply different figures.

So those claiming to offer a single, "average debt" number are not painting a full picture. Looking at more than one average provides greater insight into the debt loads of different types of card users. (For an in-depth look at credit card debt overall, see " Credit card debt statistics .")

The hunt for average

The Federal Reserve, which runs the national banking system, is a natural place to start looking for the average credit card balance. The Fed's monthly G.19 Consumer Credit report -- drawn from banks' lending reports -- shows revolving debt of $923.4 billion in October 2015. Divided by the U.S. Census Bureau's estimate of the U.S. adult population in 2014 of about 245.2 million people, that comes to just over $3,766 each.

However, the revolving debt category includes bank loans and finance company loans other than credit cards, and many people over 18 do not have a credit card. Adjusting for the fraction of adults who do not have a card, the per person balance is about $5,540.

Changes in the Fed's debt figures are closely watched by economists as an indicator of consumer activity. But since this is a broad average that doesn't distinguish between different types of cards, and includes some non-card revolving debt, it is less useful as a yardstick for measuring typical debt loads.

The Federal Reserve Bank of New York tries for a more precise look at credit card debt by excluding other types of revolving debt. The average credit card balance in the U.S. was $1,674 per account in the third quarter of 2015, according to its analysis.

What to leave out

A few asterisks follow those digits. In its population measure, the New York Fed includes people who have both a credit report and a Social Security number. That means some noncitizen residents who lack Social Security numbers are left out.

TransUnion's estimate of average card debt per borrower, at $5,232 during the third quarter of 2015, is fairly close to the figure derived from the Federal Reserve's G.19 report. The credit bureau omits cards that have gone unused for long periods, and cards that can be used only at a specific store or gas station. These contribute relatively little to the total balance while they inflate the card-carrying population. Many store cards are used once, to qualify for an introductory discount, then sit dormant for months or years.

Another wrinkle stems from the different ways people use cards. Card issuers divide the world into two groups: "transactors" who use their card for purchases and pay off the balance each month; and "revolvers" who borrow on their card, paying interest charges month to month. To pure transactors, the balances on their cards aren't really debts at all, since any purchases will be paid off before interest charges are applied.

To get a more focused picture of card debt, asked the credit bureau Experian to run an analysis separating the transactors from the revolvers. Credit bureaus, with their detailed records on roughly 200 million U.S. consumers, provide a rich trove of information for researchers. Even the New York Fed, which can tap data directly from the banking system, uses anonymized credit bureau files for its quarterly analysis of consumer debt.

As of September 2015, the average balance on a card that usually carries a balance was $7,494, Experian found. For cards used just to make purchases -- and perhaps also rack up airline miles or cash back -- the average monthly balance was much lower, at $1,128.

Shopping for rates

The drawback: These figures look at accounts, not individuals. The same person may have several cards, with different payment behaviors on different ones. So dividing cards into transactor and revolver camps is possible, but the people who use the cards do not fall neatly into those categories. For example, you might have $10,000 in debt parked on a zero-rate balance transfer card, while making purchases on a higher-rate card that is paid in full most months

Individual card debt is only part of the picture. Many of us think of our finances as part of a larger unit; the family or household. Then the question becomes, what does the average family owe on their cards?

The question leads back to the Federal Reserve, which produces a widely quoted study, the Survey of Consumer Finances. Every three years the study interviews a sample of 5,000 households or more, probing information about family budgets that is available nowhere else. The Fed released [%Link?type=article&id=8070&text="household credit card debt data"%] from the survey in September 2014.

The family unit

For 2013, the survey found that the average card debt was $5,700 for households that carry a balance --38 percent of all households. The family at the midpoint of the range had a balance of just $2,300, indicating that the average is skewed toward the high end by families that carry large balances.

However, the survey figures do not match up with the total credit card debt. In fact, households admit to having only about 60 percent of the card debt that banks say is outstanding, a team of economists from the New York Fed found.

Their report, "Do we know what we owe? Consumer Debt as Reported by Borrowers and Lenders" concluded that the person interviewed might not have a full grasp of the cards being used by everyone in the family.The report, updated in October 2015, arrived at an estimate of $9,600 for average household credit card debt.

Debts higher for those seeking financial help

Leaving aside the hunt for average Joe, there are groups that have their own experience with card debt that can be useful to know. People seeking credit counseling in 2013 -- meaning they had hit financial difficulties -- had nearly six cards, on average, and unsecured debt of $17,548, according to the National Foundation for Credit Counseling, based on the experience of its member agencies. For this group, unsecured debt amounted to 50 percent of their average annual income. Unsecured debt is chiefly credit card debt, plus payday loans and other debts not backed by property.

For people entering Chapter 7 bankruptcy, the average card debt was $17,700 back in 2000 to 2002, according to a study by the Executive Office for U.S. Trustees. That would be about $23,300 in today's dollars, according to inflation figures housed by the St. Louis Fed's FRED database.

See related:Credit card statistics, industry facts

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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