The Indispensable Means By Which Americans Live Beyond Their Means

Where would we be without credit cards? Not neck deep in debt, for one thing. A Gallup poll depicts the extent to which Americans finance their lives by leaving unpaid balances on their cards, and it’s not a pretty sight. A virtuous 37 percent of cardholders say they always pay the full amount they owe, and 16 percent claim they usually do so. But 31 percent “usually leave balances,” 12 percent “usually pay the minimum amount due, but not much more” and 2 percent “pay less than the minimum amount due.” While nearly half of cardholders carry balances of less than $500 (including those who carry none whatsoever), the average debt is $3,815.

It would be nice to think that those with the highest unpaid balances are also the ones with the greatest wherewithal to pay them off. Alas, that’s not quite the case. Among people who have credit cards, the average amount owed is $2,944 for those whose household income is $100,000 or more. That’s less than the average amounts owed by cardholders in most other income brackets: $3,314 by the $20,000-29,999s, $3,846 by the $30,000-39,999s, $4,317 by the $50,000-74,999s and $7,896(!) by the $75,000-99,999s. The average unpaid balance was lower only for cardholders whose household income is less than $20,000 ($1,377) and for those in the $40,000-49,999 bracket ($2,240). The numbers look even scarier when stated as a percentage of cardholders’ household income—for instance, 14.3 percent for those making less than $20,000, 13.3 percent for the $20,000-29,999s and 11 percent for the $30,000-39,999 cohort. Despite their sizable paychecks, those making $75,000-99,999 are seriously overextended: On average, their outstanding credit-card balances equal 9 percent of their yearly household income.

One would expect to be deafened by the noise of tossing and turning as these people fret about their debts. Instead, the poll finds a remarkable degree of unconcern. Overall, just 7 percent of respondents confessed they’re “very worried” about being unable to make minimum payments on their credit cards, with another 10 percent “moderately worried”; 46 percent said they’re “not worried at all” and 22 percent “not too worried,” while 15 percent said the question doesn’t apply to them. Looking at the data another way, the average outstanding balance among people who declared themselves “not too worried” is $4,740, which certainly sounds worrisome to me. Among those saying they’re “not at all worried,” balances averaged $2,390. Respondents who admitted that they’re “very” or “moderately” worried have an average balance of $8,120 to disturb their sleep.