Using debt to fund our daily lives is the status quo in America. Everything from cars to clothing can now be paid for with debt. Americans should know plenty about borrowing money, but new research from NerdWallet finds that isn’t always the case. Let’s take a look at three disturbing facts about debt.
1. We have more credit card debt than we think
The average credit card debt per household is $7,493. However, this includes all households, such as those who diligently pay off their plastic each month or avoid credit cards like the plague. The average amount owed for households with at least some credit card debt is $15,355. Overall, Americans owe more than $700 billion in credit card debt.
You’d think credit card users would know how much debt they carry. After all, statements come every month like clockwork. Yet consumers vastly underestimate or underreport how much they owe. Lender-reported credit card debt was 155% greater than borrower-reported balances in 2013, resulting in a difference of more than $415 billion. Perhaps Americans are too embarrassed to admit their charging habits. Seventy percent of Americans in NerdWallet’s analysis say there is a greater stigma around credit card debt than any other type.
“There are plenty of reasons why consumers might underreport credit card debt. Some don’t know how much debt they actually have. In our survey, 23% of people with a credit card say they have been surprised at least some of the time by their bill,” explains NerdWallet. “This suggests that consumers struggle to keep track of their balances. It’s also possible that consumers aren’t reporting balances they’re planning on paying off. But 13% of consumers with credit cards say they have forgotten at least sometimes to pay their bill, so those planned payoffs might not be happening.”