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Average credit card debt is elusive target

Fred Williams

I like to think I’m doing better than average — who doesn’t?

But defining “average” isn’t so easy when it comes to credit card balances. In attempting to crack the mystery surrounding average card debt in the U.S., I slogged through a morass of numbers and definitions.

When it comes to the average balance, almost anyone can find a number that makes them happy. Depending on how you look at it, the average is anywhere from about $1,000 to over $8,000.

INFOGRAPHIC: Click to enlarge the graphic to take a graphical look at all the different average card debt numbers.

That spread is the result of a fragmented card-carrying population. A rewards card has about as much in common with a balance-transfer card as a hammer does with a screwdriver.  The different types of plastic come with different balance patterns.

There are even names for people who use plastic in different ways. Experian, the big credit bureau, calls someone who transfers balances from one card to another a “rate surfer.” Then there’s the consolidator, non-activator and the seasonal user, whose names are self-explanatory.

In light of all this, coming up with a single number for the “average credit card user” seems like a quaint, old-fashioned idea. That person doesn’t exist anymore, if they ever did.

So instead of trying for one number, we asked Experian to comb through their credit files and come up with a picture of two main types of users. “Transactors” just use their cards for purchases, enjoying the convenience and the one-month float before they have to pay their bills.  “Revolvers” use their cards as a borrowing instrument, carrying a balance and paying interest charges.

In March 2013, a transactor-type card had a balance of $1,037. For a revolver, the amount was $8,220.

These figures are per card, however, not per person. People don’t divide neatly into these categories. You yourself may be some of both — say, if you have a rewards card where you rack up purchases, plus a zero-percent introductory rate card where you park a balance.

Even when you’re looking for a one-size-fits-all average card balance, there are snags. Should you exclude store cards and cards that get very little use? ($4,878) For the user base, do you want to count all U.S. adults ($3,364), or make an estimate based on the proportion that say they have a card? ($5,047.)

Then there is the average household’s card balance, as distinct from the average balance per person or per card. This is not a hard concept. Many people think of their finances at the family level, with income, assets and debt swirling in one big pot.

But if family finances are like a stew, card debt is the missing dumpling. The Federal Reserve does produce a number in its Survey of Consumer Finances once every three years. However, it doesn’t hold up very well. The families in the survey only admit to about half the card debt that a separate analysis of credit reports says they should have.

Researchers at the New York Fed are working on a way to track credit reports to see what’s really happening at the household level. In the meantime, they seem to have confirmed a bit of conventional card wisdom: only some card debt is in the family budget. The rest is in a state of denial.

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