Reality is not all that Americans are out of touch with. A survey by the Federal Reserve revealed that more than a third of American households don’t accurately report their credit card debt. On average, the typical consumer is about $2,000 short on reporting their debt. The data further revealed that only half of households reported carrying any debt.
The survey is called the Survey of Consumer Finances and is a reputable source in the industry. The survey was conducted when survey takers were asked to report their own debt, compared to their actual death reported by Equifax — one of the three major credit reporting agencies. An interesting fact is that data reported that consumers on average more accurately reported their mortgage and student loan debt, and more consistently misjudged their amount of credit card debt.
On average, households end up reporting $4,700 in credit card debt, while the facts state that most families have credit card debt close to $7,134. “Household surveys are the source of some of the most widely studied data on consumer balance sheets … at the same time, recent research questions the survey respondents’ propensity and ability to report debt characteristics accurately,” according to The Wall Street Journal in reference to the report.
Even if analysts are uncertain about the validity of the survey, it’s clear that consumers are in the dark about their credit card debt. Some of the disparity in reporting could come from asking members of the household who were not fully aware of the household’s debt situation. But that hiccup can only account for so much, the trend seems to point much more towards the fact that the American consumers are not aware of their credit card finances.
Consumers should do their best to stay on top of their finances, the amount of debt owed and their credit score so they can make sound financial decisions in the future. If Americans are not aware of their debt, it can become easier for them to end up drowning in debt.
Consumers can keep track of their debt by monitoring their statements every month, as well as paying off bills on time and keeping spending low can be efficient ways to always know how much you owe in credit card debt. Also, many banks have phone applications that alert you to your credit card balance and the amount due on your next payment.
It seems that consumers don’t forget about mortgage and student loan payments because they are more or less the same every month. Try to keep the same habit, by paying a certain percentage of your balance every month. Falling out of touch with the amount of credit card debt you owe is not a smart move. Always keep a keen eye on your debt, your credit score and the amount of money you have.