When a family member told me they’re skipping college in order to avoid the extra debt, I couldn’t bring myself to tell them that they’re making a huge mistake. A lifetime of low earnings makes it tough to get by. But so does crushing debt. Here’s what the numbers from new studies say.
A new paper by staffers from the New York Federal Reserve compares what people say they owe to hard numbers derived from lenders on what they actually owe, and finds we generally know what we owe, with one exception:
Credit cards. Only on credit cards is their a difference, and it’s a big one. We underreport what we owe on our cards by a third to one-half, the researchers say.
The research sheds some new light on a topic that’s at once a foundation of the card industry, and a mystery: the fog that comes over consumers when they pull credit cards out of their wallets.