Credit Card News
Advertising Disclosure
Credit-Land.com is an independent, advertising-supported web site. Credit-Land.com receives compensation from many credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. Credit-Land.com has not reviewed all available credit card offers in the marketplace.
Credit Card Applications » News » Other » Could Americans Not Realize How Much They Owe?

Could Americans Not Realize How Much They Owe?

By
Add to Favorites:
Could Americans Not Realize How Much They Owe?

Apparently, many Americans are completely out of touch with the reality of how much money they owe.

A new study released by the New York Federal Reserve Bank shows that at least a third of households underreport their credit card debt by an average amount of $2,000, when compared with lenders’ overall reports. Credit card companies also reported being owed money by 76% of households. Meanwhile, only 50% of households reported carrying any credit card debt.

Although the Fed’s own Survey of Consumer Finances is considered to be a trustworthy, authoritative source of data, the recently-discovered household debt inaccuracies challenge the report’s validity. When the debt levels reported by survey participants were compared against the debt amounts that lenders reported to the credit bureau Equifax, it was discovered that consumers had accurately reported the amount of debt they had in terms of student loans and mortgages, but they were inaccurately reporting the amount of their credit card debt. The inaccuracies were, in fact, quite large—borrowers only professed to owing around 50 cents on every dollar’s worth of debt that was reported by the credit card companies.

“Household surveys are the source of some of the most widely studied data on consumer balance sheets, with the Survey of Consumer Finances (SCF) generally cited as the leading source of wealth data for the United States. At the same time, recent research questions the survey respondents’ propensity and ability to report debt characteristics accurately,” stated the report, according to The Wall Street Journal.

Even taking into account adjustments made in the calculations of the report to compensate for certain inaccuracies, the fact remains that the average household reports $4,700 worth of credit card debt, while lenders are reporting an average balance of $7,134 in the same debt per household.

While embarrassment could partially explain the underreporting, the report states that, “Despite the credit card debt mismatch, bankruptcy history is reported comparably in the borrower and lender sources, indicating that not all stigmatized consumer behaviors are underreported,” according to The Wall Street Journal.

The unfamiliarity of different members in a single household have with each other’s personal financial situation is another potential explanation. However, simple ignorance seems to be the only plausible explanation for the sheer magnitude of the discrepancy. It would seem that Americans are simply not aware of how much credit card debt they owe.

“Uninformedness could result from willful ignorance, as large credit card balances are not welcome information, from difficulty understanding the growth of credit card balances,” states the report, according to zimguardian.com.

It seems that, at least as far as credit cards are concerned, Americans that need to own up to what they owe.

Add to Favorites:

Related News:

Fifth Third Bancorp Upgrades App

By Dar Dowling, Posted: January 20, 2017

Fifth Third Bancorp has upped the ante when it comes to their mobile app, in terms of how many ways users can pay for merchandise – now letting them make payments with all of the available payment platforms. Continue reading
New Credit Card by Amazon and Chase

By Dar Dowling, Posted: January 19, 2017

Amazon.com, Inc. and Chase have joined together to roll out the new Amazon Prime Rewards Visa Signature Card offering 5% back on all Amazon.com purchases. Continue reading
Wix and Square Team Up to Make Payments Easier

By Dar Dowling, Posted: January 18, 2017

Wix, a cloud-based web development platform letting people set up a wide range of websites, is teaming up with Square to provide merchants and entrepreneurs a new method of taking payments for products and services bought online and in ... Continue reading
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.
Unlimited 1.5x rewards on every purchase, every day. For every $1 you spend, you earn 1.5x Miles.
For Excellent, Good Credit
You could turn $200 into $400 with Cashback Match™. We’ll automatically match all the cash back you earn at the end of your first year. New cardmembers only.
For Excellent, Good Credit
Guaranteed $500 Unsecured Credit Limit
For Bad Credit