Orange County’s credit-card debt is up 12% in February ‘08 vs. a year earlier, while auto-loan debt is flat, according to stats from Costa Mesa-based Experian.
Last week I blogged that credit-card debt has been rising just as banks put caps on home equity lines of credit amid falling home prices. The implication is that instead of drawing money out of their homes, O.C. homeowners are running up credit-card bills.
I asked Experian to break out credit cards and auto loans (last week they had the categories merged), and they were kind enough to comply.
Here’s the breakdown:
February 2008
Average credit card balance: $8,300
Average auto loan balance: $17,600
January 2008
Average credit card balance: $8,300
Average auto loan balance: $17,400
February 2007
Average credit card balance: $7,400
Average auto loan balance: $17,600
How are these averages calculated? I have been told that the oft-reported $8K average (nationally) is really the average of cardholders with balances. When you consider the “deadbeats” who pay off their cards completely each month, the average drops.
It’s funny how many different meanings the word, deadbeat, has in this context.
If you ask people who pay their balances off fully each month, a deadbeat is someone who avoids his / her credit obligations, e.g., by not paying, and eventually defaulting.
If you ask people who pay interest by carrying a balance, a deadbeat is someone who pays off his / her balances every month in full, thus avoiding any interest and fees.
Let’s make something clear:
- “credit savvy”: people who pay in full every month, pay no interest, and perhaps make money using their pristine credit by finding good deals, e.g., promotional APRs w/ low transaction fees,
- “suckers”: people who carry a balance month to month and pay hefty interest and fees to the banks. May people in this category have long and healthy lifes making credit card companies rich and creating opportunities for the group of people immediate above,
- “deadbeats”: people who get into credit card debt, then default. May people in this group never qualify for credit again.
Now, to satisfy odograph’s curiosity, does the $8K average include the mothly balances of the credit savvy borrowers, or just the suckers?
once the cards are tapped out, the fat lady will be singing for so many households here in OC. but don’t worry, I hear from the permabulls that it is a great time to buy