Average American has $8,460 in debt
BY PHIL MULKINS World Action Line Editor
Sunday, March 01, 2009
3/02/09 at 12:53 PM
Dear Action Line: Now that the financial habits of Americans have infected the whole world, and the government plans to "bail out the overextended mortgagees," what's next? Free cars for the masses? I make my own mortgage payments, my own coffee and my own supper. How much does the average American owe? — M.T., Tulsa.
Every three years, the Federal Reserve looks into the financial condition of American families. Recently it released the results of its most recent study — the "Survey of Consumer Finances 2007." See it at tulsaworld.com/SCF07. This look into the financial condition of American families includes credit-card debt. The survey interviewed 4,422 families.
Survey says: "This survey provides good information on how families in the U.S. handle their credit-card debt," said Bill Hardekopf, CEO of LowCards.com and author of "The Credit Card Guidebook." It's a look at the trends of 2004 through 2007; although, knowing what has happened to financial institutions and credit-card loans since then, makes it apparent some of these statistics are dated."
Credit card balances: In 2007, the "median" balance for those carrying a balance was $3,000, up 25 percent from 2004. The "mean" balance for those carrying a balance rose 30.4 percent to $7,300 (the "mean" is the average of a group of numbers and the "median" is the middle number in a string of numbers).
Credit cards: The median number of cards was two per family. The median interest rate rose one percentage point to 12.5 percent. The median credit limit rose 21.4 percent to $18,000. "Since this survey, credit limits have been cut for many cardholders, said Hardekopf. In the Federal Reserve's latest quarterly loan officer report, 60 percent of banks said they have tightened lending policies for credit cards over the past three months.
Tulsa debtors: The Consumer Credit Counseling Service in Tulsa — see
tulsaworld.com/CCCS
— educates and aids people who have gotten into debt. Three months ago, Margo Mitchell, president and chief executive officer of Credit Counseling Centers of Oklahoma, said her typical client owed $20,679, not including mortgages. The bulk of this is credit-card debt. She said the Federal Reserve places American consumer debt at $2.6 trillion in nonmortgage debt — "$8,460 for every man, woman and child."
When they sit down and look at where their money has gone, clients are shocked. They see money spent on fancy coffee and steak dinners takes away from what they struggle to attain: financial security and peace of mind. But only 39 percent of Americans say they use a budget to track household spending, says the National Foundation for Credit Counseling, at tulsaworld.com/nfcc.
Submit Action Line questions by calling 699-8888 or by e-mailing phil.mulkins@TulsaWorld.com or by U.S. mailing it to Tulsa World Action Line, PO Box 1770, Tulsa OK 74102-1770.
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