As featured in The Wall Street Journal, Money Magazine, and more!

Under-reporting Personal Household Debt

This article was written by in Credit, Debt Reduction. 10 comments.

If you want to know how much credit card debt Americans have, don’t ask the borrowers. For years, economists have sought debt data from both borrowers and lenders for credit card debt and four other debt categories. Borrowers report their debt balances by responding to household surveys, like the Survey of Consumer Finances. Lenders report debt to the credit reporting bureaus such as Equifax.

Relying on self-reported information for studies is always a risky approach if you’re planning to make any scientific assumptions based on the data. Everybody lies. Or, in some cases, people think they know the answer to a question about how or why they do something, but the truth remain undetected. Asking a population of consumers if they will transfer all their money from a big bank to a credit union will always result in overstating the number, as people tend to respond as if they were their ideal versions of themselves. Surely, a quantifiable question such as their debt balances shouldn’t be subject to this kind of error.

In fact, for most types of credit card debt, the self-reported balances match the issuer-reported balances. In only one category is there a discrepancy: credit cards.

Binyamin Applebaum from the Economix Blog explores some of the possible reasons that consumers misreport credit card debt. Among the possibilities:


Most of the other debt categories reported, such as student loans and home mortgages, tend to be socially acceptable. A consumer who feels embarrassed about a behavior or a state of being, there’s a chance he or she will be less willing to report it on a survey. Personal bankruptcies, on the other hand, could also be embarrassing, but households report them correctly.


The study comparing the two debt reporting approaches show that single people report their credit card accurately while households do not. Household surveys are generally answered by only one person within the household, and that person may not be aware of the other person’s debt, even if the family has chosen to combine accounts.


If someone were to ask me how much credit card debt I have, I’d say I have none. My latest balance sheet (net worth report) shows that is false. At the end of each month, I have a balance on my credit cards. I pay my credit card balance in full every month before it is due, but a snapshot on any date would show that I have a balance. People like me might report that they have no credit card debt, particularly if the question is not explained well on the survey. The issuers see it differently. They report a balance to the credit bureaus even if the issuers expect (or would expect if they note patterns) the borrower to pay in full.

When correcting for these issues, the researchers who conducted the study comparing the two reporting techniques still couldn’t explain the remaining discrepancy. Issuers reported more than twice the amount of credit card debt borrowers reported. The only possible conclusion is that people just don’t know how much they owe on credit cards. The study concludes that “uninformedness” is the problem. People just don’t know how much credit card debt they have, even if statements make this information easily accessible, at least on a monthly basis.

Two important steps in taking control of your finances are to take an inventory, finding where you stand in every financial account including debt, and to track your money, knowing how much is coming in and going out, and when these changes happen.

Do you know how much credit card debt you have? Do you think it matches what your credit card issuers say you have?

Federal Reserve Bank of New York [pdf] via Economix

Published or updated October 25, 2011.

Email Email Print Print
About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

Comment Policy: We love comments! However, the comments below are not provided or commissioned by this site or its advertisers. Comments have not been reviewed, approved or otherwise endorsed by this site or its advertisers. It is not this site or its advertisers' responsibility to ensure all comments and/or questions are answered.

{ 10 comments… read them below or add one }

avatar 1 Anonymous

I started reading this article thinking how interesting it was that people would lie on surveys and then your point about carrying credit card debt came up. Yep, I would be one of those who would answer no credit card debt because I pay by statement in full, but don’t pay off the amount that is already on the new billing cycle. Great point.

Reply to this comment

avatar 2 Anonymous

A few years ago when I got serious about paying off my credit cards, I sat down with an excel spreadsheet and listed all my debt. It was difficult to be honest with myself – some debt I felt was “okay” and other debt I knew I had to pay off. Though I’ve paid off all of my credit card debt and am no longer paying interest on that, I currently have small balances on 0 APR cards that I’m paying off and don’t count it as “debt” though it really is. (I’m paying off a fridge and a couch before the interest accrues.) So, if I were to be surveyed I’d be one of the people who “lied” on the survey. Debt is a tricky thing. If I sat down again with an excel spreadsheet I’d probably be surprised when I added up the remaining balances on the couch and fridge (though it’s under $1000 now).

Reply to this comment

avatar 3 Ceecee

I would not have reported the current balance due either, if I planned to pay in full at the end of the month. If you have ever watched Gail Vaz-Oxlade’s show “To Debt Do Us Part,” you see that almost all of the couples featured estimate their debt at less than what it is.

Reply to this comment

avatar 4 wylerassociate

I have a balance on my credit card that I am currently paying off and trying to knock out. Shame & ignorance is definitely part of it but we should not forget that many people lie when answering surveys so sometimes I do wonder how accurate these surveys are.

Reply to this comment

avatar 5 Cejay

I also would have said that I have no debt since I pay my credit card off in full each month. But we actually carry a $2,000.00 or so average balance each month. Just charging groceries, gas, medication, cleaners and all the various sundries that a household has each month. But I find it acceptable since the money is in the bank each month and we get rewards.

Reply to this comment

avatar 6 shellye

I know exactly how much I owe on my credit card and try to pay it off each month. I have seen on my own personal credit report where the balances are different, usually because the credit reporting agency is a month or two behind on their balance updates.

Reply to this comment

avatar 7 Anonymous

Therein lies the rub, particuarily if looking for a lender. The Credit Card companies send in their data, which is a snapshot in time. Even if they used the end of a billing cycle, charges made after the cycle’s closing date would show up as debt. Only a timing analysis would show that you pay each bill in full each month. So you might have to show a series of credit card bills, reflecting the amounts due and the amounts paid, in order to convince a lender that you’re a lower risk than even your credit score reflects.

Reply to this comment

avatar 8 Anonymous

Based on the end of month balance this month I have about $8,000 of cc debt.

However I always pay off my bills when due and thus I wounld STILL state that I have no cc debt.

I have no net debt I have about $230,000 in us savings bonds and a $170,0000 mortgage and I guess $8,000 in cc debt.

Reply to this comment

avatar 9 lynn

I wouldn’t fill out a survey unless I was given a cash incentive. Then I would, but I’d never tell the truth. It’s personal information that I keep close to my heart. With that said, among ya’ll, I will reveal that I am happy at this time in history to be totally debt free.

Reply to this comment

avatar 10 qixx

I know how much CC and other debt i have since i started letting help me track it. Before that i had no real idea. It was only with starting to track a monthly balance sheet that i saw the differences and changes to these numbers.

Reply to this comment

Leave a Comment

Note: Use your name or a unique handle, not the name of a website or business. No deep links or business URLs are allowed. Spam, including promotional linking to a company website, will be deleted. By submitting your comment you are agreeing to these terms and conditions.