Many Consumers Burdened by 'Debito'

A straight-to-the point look at consumers' credit card habits.

March 10, 2014
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The abundance of data, like foreign travel, can be overwhelming.

Take Mom and Dear Old Dad’s recent month-long sojourn to Italy, which had an extensive itinerary: the Amalfi Coast, Sorrento, Venice, Pompeii, the many significant landmarks of Rome, and countless other sites.

When I asked if they enjoyed their trip, my exhausted parents sighed. “Well, yes,” said Mom. “Though I think your father was a bit overwhelmed.”

“Yes,” Dad agreed. “Great place to visit, lots to see, but they kept shuffling us from one thing to the next. I never got to fully appreciate anything. A little overwhelming…” he trailed off, lost in confounded reflection.

My parents’ reaction resulted from information overload. The deluge was too much to absorb and enjoy, and significant aspects of any given site became lost in the hubbub.

So it goes for those attempting to locate specific bits of information in our data-rich environments.

This week, let’s examine one small piece of the many issues surrounding credit cards—consumer credit card debt trends and sentiment regarding such debt. Other card considerations exist, but will not cloud our exploration in this limited analysis.

‘A wealth of information creates a poverty of attention.’—Herbert A. Simon, American political scientist

First, let’s consider the numbers. See “American Household Credit Card Debt Statistics 2013” from NerdWallet.

Here, “The average U.S. household credit card debt stands at $15,270, the result of a small number of deeply indebted households forcing up the numbers.”

Federal Reserve statistics, however, indicate the average household owes $7,123 when all households are considered, an important distinction.

In total, Americans owe $856.9 billion on their credit cards, “the third largest source of household indebtedness.”

The detailed statistical analysis of card debt by state, over time, and explanation of what this means to our economy provides a thought provoking overview.

Another perspective is available at “Consumer Credit & Payment Statistics” by the Federal Reserve Bank of Philadelphia.

This detailed quarterly report provides data on consumer debt, credit performance, and supply and demand of credit. It also features a “Consumer Payments Snapshot, which includes statistics on credit and debit cards and other noncash payments, as well as families’ revolving credit.”

It is important to note “Credit Card Debt Hits All Incomes—Big and Small,” according to Bankrate.

This survey reveals that almost 24% of respondents have more debt on plastic than money in the bank, and another 16% have neither credit card debt nor savings. “That puts 40% of the population close to the edge of ruin.”

Let’s allow ourselves a small tangent to more closely examine one demographic’s particulars with card debt. “Seniors Overspend on Mortgage, Credit Cards,” says USA Today.

Seniors are more willing to acquire card debt than in times past. “The average credit card balance for 65- to 74-year-olds in 2010 was $6,000, compared with just $2,100 in 1989. For those age 75 and older, the average balance was not even measurable in 1989, but had ballooned to $4,600 by 2010.”

Do you know levels of card indebtedness in your membership? Do they meet or exceed the averages?

‘Sometimes a pessimist is only an optimist with extra information.’—Idries Shah, Reflections

Are consumers optimists about their debt situation and the future? What is the impact of card debt?

Consumers Have Overwhelmingly Poor Outlook for 2014 Economic Recovery,” notes PR Newswire. Despite rising stock markets, “the unpredictable nature of our economic climate has led many to concentrate on keeping their finances in-line at home.”

Survey results show “The most important financial decision for survey participants in 2014 is paying off credit card debt [35%].”

One-fourth of consumers prefer paying off card debt to saving. This suggests a consumer desire to reduce debt while riding high on the market.

Although this does not guarantee consumer confidence, it does lead to optimism for greater financial stability in the coming year.

Americans Get Their Financial Houses in Order for 2014,” corroborates a Wells Fargo survey reporting on consumer awareness of card debt concern and a desire to manage other debt more aggressively.

“Consumers are engaging in healthy fiscal habits such as paying off their credit cards every month (39%), saving for major purchases rather than relying on credit (38%), and sticking to a budget every month.”

Finally, do you know “Who Will Be Debt-Free in 2014?” This Credit.com blog post focuses specifically on the credit card debt issue in a summation of its 2014 Americans and Credit Card Debt survey.

Key findings:

Hopefully this targeted examination of the extent of credit card debt among American consumers and their sentiments has kept you focused on the issue without becoming too distracted by other interesting tidbits along the way.

Don’t become overwhelmed in an information deluge. Per Ralph Waldo Emerson, “There are many things of which a wise man might wish to be ignorant.”

 

 

 

 

 

Lora Bray is a research librarian at CUNA.