Do you Fall Outside the Average Credit Card Debt Range?
If you carry a balance on your credit cards, you might assume that the amount of your debt is in line with the average credit card debt in America. After all, millions have thousands of dollars in debt and if everyone’s doing it, then it must be okay – right? That line of thinking can be deadly to your financial future. Here are some things to keep in mind when analyzing your credit card debt…
1. What Do You Think is Average?
If you think that your credit card debt is in line with the average credit card debt in America, you probably have some preconceived notions of what “average” really means. If you’ve been following statistics, don’t kid yourself — statistics can be misleading.
If you’re quoting that the average American’s credit card debt is about $9,000 you’re wrong. Technically, that’s what the statistics say, but that’s not the real picture. The average person owes less than $3,000 in credit card debt according to MSN’s Money Central.
The $9,000 that people quote is a statistic that was obtained by dividing the total credit card debt in the United States by the number of credit card holders. Let’s say (for simplicity’s sake) that there are 5 credit card users in the country. Four of them have credit card debts of $2,000 each. The fifth has a credit card debt of $50,000.
If you use the “statistic method” that’s behind the $9,000 figure that so many people go by, the average credit card debt is more than $11,000 according to the model, although almost every single credit card holder has a debt of just $2,000. Starting to see the picture?
2. What’s Good For Mr. Goose Isn’t Necessarily Good For Mr. Gander
Let’s call you Mr. (or Ms.) Gander for a moment. You have $10,000 in credit card debt, but that’s okay because your friend Mr. Goose has $10,000 in credit debt too. Time for a quick reality check…
Just because Mr. Goose has $10,000 in credit card debt doesn’t mean it’s okay for you to have that much debt too. You are not Mr. Goose. You are Mr. Gander. And regardless of what you think, just because it’s okay for Mr. Goose to have $10,000 in credit card debt doesn’t mean it’s okay for Mr. Gander too.
Mr. Goose may very well be overextended or his income might be two or three times yours. Either way your situations are not identical and you can’t compare his credit card situation to yours.
So before you assume that your credit card debt is in line, ask yourself why you really think that. Are your finances really under control, or have you been comparing your debt to the debt of others, assuming that you’re fine if you’re going along with the flow?
Remember, just because you think that your debt reflects the “average credit card debt” in America, it doesn’t mean you have a healthy credit situation.
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For more tips on credit cards, saving money and avoiding getting taken, check out CreditCardTipsEtc.com, a website that specializes in providing credit card tips, advice and resources.
What Are the Statistics For Average Credit Card Debt?
Nowadays, debt management is becoming a must for most families. We have to realize this fact.
Many consumers have severely cut back on spending as their earnings outlooks have become cloudier. As recently as 2008, studies showed the average cardholder has 7.6 cards. Unfortunately, even though the spending has stopped, the debt accumulated in the last few years still has to be paid off.
You probably wouldnt believe this but 39% of student loan borrowers now graduate with unmanageable levels of debt, meaning that their monthly payments are more than 8% of their monthly incomes. Most people believe that the average American credit card debt is in excess of $5000. The average credit card debt in America is actually far less than many news channels and analysts mention.Using government debt data the corresponding research has shown that the average American adult is carrying $4,013 in card debt and the average American family is carrying from $7000 to $10000 in such debt just on their cards. Revolving debt is mainly debt from cards, although related revolving consumer debt such as home equity lines of credit are included as well.
The vast majority of cards are bank credit cards. Of families with cards, 96.1% have a bank issued card. 56.7% have one issued by a store, such as Macys. Only 11.9% have a gas credit card.
In fact about 25% of the US population has no cards at all. About one third of all the US population that had credit cards paid off their complete card bills.
As for me, I have never had a card myself. I believe that once you have got used to it it is hard to stop using it and then it can lead you deep into the debts. But some people have already got used to it and cant imagine their lives without credit cards
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Whatever you do, don’t wait until it’s too late. The earlier you consider a how does debt consolidation work program the more options will be available for you. A Debt Management plan may be just what you need. Debt counselors have the knowledge and they are willing to do their best to help you.
Average Credit Card Debt And How It Effects You
The average credit card debt can be shocking. Unfortunately, most Americans are over-loaded with credit-card debt.
Consider these facts:
The most (general purpose) credit cards. (cards in circulation during 2008)
1. Chase – 119.4 million
2. Citi – 92 million
3. Bank of America – 80.2 million
4. Discover – 48 million
5. American Express – 46.5 million
6. Capital One – 46.3 million
7. HSBC – 38.8 million
8. GE Money – 27.2 million
9. Target – 23.4 million
10. Wells Fargo – 17.3 million
(Original source: Nilson Report, February 2009)
That’s a lot of credit cards! The truth is that the average American household with at least one credit card has nearly $10,700 in credit-card debt. The average credit card interest rate is typically in the mid teens, if not higher, with some APRs as high as 30%! Given this scary fact, you do want to be aware of how to best reduce your average credit card debt as quickly as possible.
Summary of the Best Ways to Reduce Average Credit Card Debt:
* Use debt for the right purposes such as mortgages and student loans
* Pay off higher interest credit card debt first
* Pay more than the minimums on your credit card payments
* Pay attention to what you are spending and cut back where you can
* Borrow from lenders with the best interest rates
* Build up savings as a cash reserve for unexpected expenses
* Pay off higher interest debt before paying down your mortgage
* Seek professional debt help if you need it
Tips to Lower your Average Credit Card Debt
Not all debt is bad. Believe it or not, in some circumstances, having some debt is actually a good thing because it can help you have a good credit rating. This is important for when you do need credit for things like mortgages or student loans.
Borrowing money for a mortgage or for college education is a good use of loans. Make sure you only borrow within your limits so you will be able to repay your loans. Also, shop around and find the best loan terms and interest rate. Another benefit of a mortgage loan is that often the interest is tax deductible.
Beyond home loans and student loans, most revolving debt isn’t smart. Don’t fall into the habit of using credit cards to pay for consumables, such as meals and vacations, if you can’t afford to pay off your monthly bill quickly. It doesn’t make sense to pay interest on these things, and by using a credit card for living expenses, you will accumulate more debt fast.
Always put aside some money each payfor these necessary items and pay off your bills quickly. If there’s something you have been wanting to purchase that exceeds your monthly budget, save for it over a few paychecks so that you will be able to avoid putting it on a credit card.
Get control of your spending. It is too easy to get into debt and acquire thousands of dollars without even realizing what happened. Don’t make this mistake or it can take a very long time to dig yourself out and pay off the credit cards due to the interest payments.
Keep track of your spending and or collect receipts. If you know how much you are spending, you can raise awareness of where your money is going. Reduce spending on unnecessary items and save the money or use it to pay down other debt faster.
Pay off highest-interest rate cards and loans first. If you really want to get out of debt faster, focus on repaying those cards and loans that have the higher interest rates. Also, pay at least the minimum payment, if not more, on your other debts. Take the cards in order and pay them off one at a time from highest interest rate to lowest and as soon as one card is paid off, start on the next one.
Don’t pay only the minimum payment. When you only pay the minimum amount due on your credit cards, you will be lucky to pay off more than just the interest and it will take a very long time to pay off that bill. Plus, you will spend a lot on interest payments over the term of the loan.
Borrow from the right places. While you may be tempted to borrow money from your retirement plan or take out a home equity loan to reduce your average credit card debt, this can also be risky. You can pay high penalties and taxes on withdrawals from a retirement plan, and if you can’t repay a home equity loan it is possible you could even lose your home.
Prepare for the unexpected. It is always a good idea to set aside some savings in reserve in case you have an unexpected life event or emergency. For example, a major car or home repair, or an illness can wipe out your savings fast.
Don’t assume you should pay off your mortgage first. You may want to pay off other debts faster than your mortgage because it is typically a lower interest rate. Also, they often allow you to deduct at least some of the interest from your taxes. If your mortgage has a high rate, try to refinance it instead.
Get help when you are in trouble. If you find yourself with a lot more debt than you can handle, then get some professional help. There are many helpful debt management and counseling agencies that may help you consolidate your debt. They can also help you understand and better manage finances. Just do your research to select a reputable company.
These average credit card debt reduction tips are great techniques that you can start applying today, and take charge of getting out of debt fast!
As long as you have the willpower to apply these techniques, you will begin to relieve the pressure of too much debt.
Article Source: http://www.articlesbase.com/finance-articles/average-credit-card-debt-and-how-it-effects-you-1066693.html
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Lisa Max will show you various methods to get out of debt. This is a well researched website, providing information about debt reduction. As a long time investor and owner of numerous properties, she is well acquainted with methods to help in debt relief. Visit her website and get answers to your debt related questions.www.smartdebtrepair.com
Average Credit Card Debt
The average credit card debt of Americans and those around the world has a large impact on your financial well being. According to a April 2009 Nilson Report, 78% of American households have a credit card. Before we get to the average credit card debt, it is important to point out that according to the same report, Americans held a combined credit card debt of $972.73 billion. How do you stack up to the average credit card debt? Read on…
When it comes to average credit card debt, the average credit card balance per card was $1,157 at the close of 2008 (according to Experian, March 2009). Moreover, the average outstanding credit card debt for households amounted to an impressive $10,679 by the end of 2008. Another way to look at the average credit card debt is to consider the average balance for people carrying a balance, which was $7300 in 2007. Keep in mind that this is an averaged credit card debt and can be skewed by those who have extremely high credit card debt. Other ways to look at average credit card debt statistics involve the mean.
There are a lot of facts and figures out there and ways to look at the average credit card debt, but what does it mean for you? Even if your average credit card debt is below that of the various national averages, you should not be content. Credit card debt is an extremely expensive and wasteful proposition. Unless you have an emergency going on in your life, reducing and eventually eliminating credit card debt (and thus your own average credit card debt) should be your primary financial objective. In future posts we will discuss how to reduce debts in sustainable ways to get you on the path to financial freedom. Stay tuned for more information on average credit card debt and other financial/credit card topics.
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