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Does a balance that has not accrued interest count as debt for this measurement? I.e. people who always pay the statement.
by happytoexplain 2mo ago
Does a balance that has not accrued interest count as debt for this measurement? I.e. people who always pay the statement.
- panarky 2mo agoThe $1.26 trillion Federal Reserve figure includes both balances paid in full every month and balances accruing interest. Convenience spending by "transactors" (roughly 35% of cardholders) who pay in full every month is something like $200 billion of this.
- fhdkweig 2mo agoDo you have a citation for the 35% number? I wouldn't have thought it was that rare.
- panarky 2mo agoLet me Google that for you ... Ah, here it is https://bpi.com/missing-factors-in-the-cfpbs-analysis-of-rising-credit-card-interest-rates/#:~:text=As%20shown%20in%20Exhibit%204%2C%20the%20share,to%2013%20percent%20over%20the%20same%20period. https://bpi.com/missing-factors-in-the-cfpbs-analysis-of-ris...
- JKCalhoun 2mo agoI'm surprised it's that high. While times have changed, the whole idea of the credit card was to purchase a thing you could not otherwise afford to.
- happytoexplain 2mo agoI'm shocked how small that part of the pie is. That's concerning.
- tokioyoyo 2mo agoThere have been a couple of episodes of Simpsons where “credit card debt” was the subplot. Should give a good idea how “relatable” the experience it was even in the older days. Obviously I’m exaggerating, but you get the idea.
- fhdkweig 2mo agoI can understand how someone right on the edge of disaster (and Homer was always on the edge) would get into debt, but those numbers would imply 2/3 of people are in what I would consider imminent financial collapse. Surely people couldn't exist in that state for lengthy periods of time. Right?
- squigz 2mo agoThey could, and do.
- anonymars 2mo agoIf I remember the stats correctly, I believe in the US the lowest 50% of households combined have maybe 2% of the wealth
- tokioyoyo 2mo agoSounds about right.
- anon7000 2mo agoI mean does it necessarily imply that? You could pay just the minimum payment for a very long time with no consequences, I think. The main problem is you’d hit the credit limit and would have super high interest payments. But even then the minimum payment may be viable. But yeah, reality is that most people are not white collar workers with decent income. HN is probably one of the higher income forums on the internet just because of tech. Definitely a bubble here
- jjav 2mo ago> those numbers would imply 2/3 of people are in what I would consider imminent financial collapse. A suspect a lot of people also carry ongoing credit card debt because they're bad at math or just don't care, not all of them necessarily anywhere near financial collapse. I have a friend who early in their career kept credit card debt for years, because he just liked to pay the minimum. As much as I tried to explain how dumb that was, it didn't help. Still, he was a software engineer making tons of money so nowhere near financial trouble, just financially dumb. But of course there are also lots of people who truly are in credit card debt and can't afford to pay anything but the minimum.
- Fire-Dragon-DoL 2mo agoI don't get how people come up with the idea of paying interests on a credit card. The interests are extortion level, 20%? Wtf? A personal line of credit is like 8%
- 9cb14c1ec0 2mo agoTechnically, people who always pay the statement do have credit card debt until they pay, it's just free debt.
- pocksuppet 2mo agoNot just technically. They literally have credit card debt in every sense of the word.
- ticulatedspline 2mo agowhile true the connotation of the title would imply meaningful debt. And people who simply use cards for convenience and never hold a past due balance isn't really meaningful debt. It's almost like counting the "debt" between ringing up your items at wal-mart and paying. For those 30 seconds you owe money. Based on some quick stats you could totally turn that into a useless headline "Americans accrued 4.1 billion dollars of debt every 30 seconds in 2025"
- jjav 2mo ago> Not just technically. They literally have credit card debt in every sense of the word. I mean technically yes that is absolutely correct. But we all know it's not what people think of as "debt", so as previous poster said, those should really be tracked separately. It is silly to consider the float between purchase time to payment time to be debt of the same type as debt carried over month to month. For one thing, debt basically always (temporary offers aside) pays interest. The float between purchase to payment pays no interest. But technicalities aside, the stats on credit card household debt would be much more revealing if they separated these numbers. They even indicate opposite things: If the temporary float balances are going up, that suggests consumers are spending more and comfortably paying it, so the economy is doing well. Whereas if the accruing monthly debt balances are going up, that's a sign the consumer is in trouble so the economy is probably doing badly.
- happytoexplain 2mo agoNot every sense - in the colloquial sense, people don't count that as being "in debt".