Good Question: How Common Is Credit Card Debt?
MINNEAPOLIS (WCCO) -- Minnesota House Speaker Kurt Daudt told reporters today he's not immune to financial struggles as a legislator. He said he had thousands of dollars in credit card debt. Records also show he faced three lawsuits from debt collectors. Daudt says he has since paid it all off.
"I don't think these are really uncommon things," Daudt said in a press conference Tuesday afternoon. "People run into this once in a while."
So, how common is credit card debt? Good Question.
According to NerdWallet, 37 percent of American households have credit card debt, which is defined as not paying off the full balance every month. Using data from the Federal Reserve of New York, U.S. Census and its own poll, NerdWallet found the average balance for those in credit debt is $15,700.
"Just because your credit card says you can borrow $10,000, that doesn't mean it's really money in your pocket," says Sean McQuay, a credit card expert with NerdWallet, "But, we have seen behaviorally, people are using their credit cards that way."
NerdWallet also found people dramatically underestimate or underreport their credit card debt. According to the Federal Reserve Bank of New York, lender-reported debt was 155% higher than borrower-reported debt.
"People are embarrassed by their credit card debt. They recognize there's a stigma around that debt and they don't want to bring attention to that fact," says McQuay.
McQuay says people generally pay only the minimums, which ends up costing them an average of $2630 a year in interest payments.
NerdWallet's survey found 23% of people with a credit card say they have been surprised at least some of the time by their bill.
"What that signals to me is that people aren't paying attention to their credit cards," says McQuay.
