The society has got a specific attitude towards credit card deals - it is presupposed that every deal will result in severe debts. It has been also counted that on average every household in America accounts for as much as $ 8,000 of debts. Taking into consideration the fact that almost every American has got a credit card that he actually uses, it only proves that the US is a credit card dependant country.

But the devil is not as black as he is painted. Although we cannot deny the majority of credit card debts, are the figures really so fair? Do they actually show the economic collapse?

If the credit card debt situation was so critical, the government would have already taken measures to copy with the problem. The amount of the credit card issued would certainly have been decreased.

On the contrary, the credit card industry is still on the rise and good credit card offers are not losing their popularity. Here is the very controversy. Why do credit card companies keep promoting their products if the statistics is not very positive? It is not very logical to act so providing that they cannot collect all the debts.

The answer is pretty easy - the false statistics. The whole confusion is explained by the incorrect method of calculation. The method itself defines no difference how well you are paying on your card deal; your credit history is not taken into consideration as well. Either way you turn out to be a bad non-payer with a bad credit score.

So, how come the statistics get this $ 8000 of debt for each household? The answer to this question is pretty simple. Statistics specialists just used the averages, whereas every smart economist would never consider averages when he/she is intended to get more or less exact results. Let me prove this to you.

Let us take 20 people that do shopping primarily with credit cards. Most of these cardholders wished they had lowest APR cards; they do not carry balances and don't owe money to their creditors. For instance, 2 people of these 20 have got substantial debts on their credit cards. How is the average figure counted? All the debts of all the 20 cardholders are summed up and this total is divided by 20! As a consequence, all the 20 cardholders turn out to be debtors. Immense card balances of the defaulters mix with the ok balances. As a result, responsible cardholders seem to carry more debt as they actually have. This calculation method is acceptable when there is a great number of numbers and a fair result is needed. Then, it is ok when all extreme numbers are excluded.

For instance, the exact numbers - 57% of all the households carry no balances at all, 30% owe $1000 and more, 24% run balance of $2000. After the total calculation only 1% of all the clients turns out to owe more than $ 20 000.

This certainly doesn't mean that there are no problems at all. Lots of cardholders need to have a credit card debt counseling in order to finally manage their finances.

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Comments

Nathan, 04:43 AM, October 23, 2007
I think that credit acr debt is completely the cardholder's mistake. He is responsible for using the plastic and he should understand that credit card debt is easier to run into than to get rid of.

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