Average Credit Card Debt? Take Your Pick

What does the average Joe owe on his credit cards?

That would be $3,364.

Or $8,220. Or $4,878. Or $1,037. Or $2,720. Or $7,100.

When it comes to credit card debt, that average Joe is one elusive fellow.

All of the numbers above are from impeccable sources of "average credit card debt" for Americans -- and depending on how it's measured and who's doing the measuring, we're either doing pretty well when it comes to managing our credit cards, or horribly.

"You think these things are simple, but they're more subtle and complex than you imagine," said Ezra Becker, vice president of research and consulting at TransUnion's financial services unit. His firm came up with the $4,878 number, which includes actual amounts spent and reported to the giant credit bureau, but which excludes unused cards.

The hunt for average The complications stem from different ways of defining credit cards, different ways of counting the card-carrying population, and the different ways people use their cards. Finding the typical balance is like the parable of the blind men identifying an elephant from the shape of its parts -- each observation is part of a larger truth.

The Federal Reserve, which runs the national banking system, is a natural place to start looking for the average credit card balance. The Fed's monthly G.19 Consumer Credit report -- drawn from banks' lending reports -- shows revolving debt of $807.5 billion in April 2013. Divided by the U.S. adult population of about 240 million people, that comes to $3,364 each.

However, the revolving debt category includes bank loans and finance company loans other than credit cards, and many people over 18 do not have a credit card. Adjusting for the fraction of adults who do not have a card, the per person balance is about $5,047.

The Federal Reserve Bank of New York tries for a more precise look at credit card debt by excluding other types of revolving debt. The average per person credit card balance in the U.S. was $2,720 in the first quarter of 2013, according to its analysis.

What to leave out A few asterisks follow those digits. In its population measure, the New York Fed includes people who have both a credit report and a Social Security number. That means some noncitizen residents who lack Social Security numbers are left out, while other people who have a credit report -- but not a credit card -- are counted in the total anyway.

TransUnion's estimate of average card debt per borrower, at $4,878 during the first quarter, is fairly close to the Federal Reserve's G.19 figure. The credit bureau leaves out cards that have gone unused for long periods, and special purpose cards for a specific store or gas station. These contribute relatively little to the total balance, Becker said, while they inflate the card-carrying population.

"There are people out there that might not use their card," he said. "I'm diluting that average balance by including a bunch of zeros."

Another snag stems from the different ways people use cards. Card issuers divide the world into two groups: "transactors" who use their card for purchases and pay off the balance each month; and "revolvers" who borrow on their card, paying interest charges month to month. To pure transactors, the balances on their cards aren't really debts at all, since any purchases will be paid off before interest charges are applied.

To get a more focused picture of card debt, CreditCards.com asked Experian to run an analysis separating the transactors from the revolvers. Credit bureaus, with their detailed records on roughly 200 million U.S. consumers, provide a rich trove of information for researchers. Even the New York Fed, which can tap data directly from the banking system, uses anonymized credit bureau files for its quarterly analysis of consumer debt.

Based on March 2013 credit card bills, the average balance on a card that usually carries a balance was $8,220, Experian found. For cards used just to make purchases -- and perhaps also rack up airline miles or cash back -- the average monthly balance was much lower, at $1,037.

Shopping for rates The drawback: These figures look at accounts, not individuals. The same person may have several cards, with different payment behaviors on different ones. So dividing cards into transactor and revolver camps is possible, but the people who use the cards do not fall neatly into those categories.

The same person "may have $10,000 on a zero-rate balance transfer card, and make purchases on a high-rate card they're careful to pay off," said Michele Raneri,  Experian vice president for analytics. They might even have a relatively low, 7 percent interest card for short-term borrowing, such as paying for a vacation, she added.

As if looking for individual card debt weren't difficult enough, it is only part of the picture. Many of us think of our finances as part of a larger unit; the family or household. Then the question becomes, what does the average family owe on their cards?

The question leads back to the Federal Reserve, which produces a widely quoted study, the Survey of Consumer Finances. Every three years the study interviews a sample of about 4,500 households, probing information about family finances that is available nowhere else.

The family unit For 2010, the survey found that the average card debt was $7,100 for households that carry a balance --39 percent of all households. The family at the midpoint of the range had a balance of just $2,600, indicating that the average is skewed toward the high end by families that carry large balances.

However, the survey figures do not match up with the total credit card debt. In fact, households admit to having only about half the card debt that bank records show, a team of economists from the New York Fed found, after looking at surveys from 2001 through 2007.

"[W]e find a substantial gap in credit card debt reporting," said the economists in their 2011 report, "Do we know what we owe? A comparison of borrower- and lender-reported debt." In the survey, the person interviewed might not have a full grasp of the cards being used by everyone in the family, the researchers said.

Leaving aside the hunt for average Joe, there are groups that have their own experience with card debt that can be useful to know. People seeking credit counseling in 2012 -- meaning they had hit financial difficulties -- had nearly seven cards, on average, and unsecured debt of $24,000, according to the National Foundation for Credit Counseling, based on the experience of its member agencies. For this group, unsecured debt amounted to 60 percent of their average annual income. Unsecured debt is chiefly credit card debt, plus payday loans and other debts not backed by property.

For people entering Chapter 7 bankruptcy, the average card debt was $17,700 back in 2000 to 2002, according to a study by the Executive Office for U.S. Trustees. That would be about $24,000 in today's dollars, according to inflation figures housed by the St. Louis Fed's FRED database.

Looking for the average card debt means making some choices. "It depends on your philosophic approach to what you're measuring," Becker of TransUnion said, "and what you're trying to do with it."

Sources : Experian, based on March, 2013 sample of credit reports looking at 24 months of payment history; Federal Reserve Bank of New York, based on analysis of Equifax credit reports, first quarter, 2013; Federal Reserve G.19 Consumer Credit Report, April 2013, and U.S. Census population estimate, 2012; TransUnion; based on credit report sample from first quarter 2013, excluding unused cards and store cards; Federal Reserve G.19 Consumer Credit Report, April 2013, and U.S. Census estimate of card users, 2012; Federal Reserve Survey of Consumer Finances, for 2010; Experian again.

See related: Credit card statistics, industry facts