The overall financial standing of the country looks pretty grim – bankruptcies have been on a steady rise over the course of the last few years and there is no sign of this trend slowing; write offs of loans and credit cards debt and defaults are as high as they have been since ’02-’03.  There is no doubt that our overall credit as a country has been in a lot better shape, but it’s probably not quite as bad as it’s being painted in the media.

A National Average is a Poor Way to Judge

All of the numbers we see everyday that tell us exactly how poorly we are doing as a nation financially are based on averages which can be a bit misleading, because a bad apple can spoil the whole bunch.  Consider this example, it may be a bit extreme, but it is a good illustration of how the “average” of something may not be so average after all:  There are ten people in a room, the first nine you question owe nothing in terms of debt in any fashion; no credit cards, no student loans, no mortgage – zero… the tenth person has tallied up a whopping total credit card debt of over one hundred thousand dollars.  This makes the average debt of each person in the room over ten thousand dollars, but in no way reflects the true financial burden of the individual subjects.

A much better gauge of what’s going on would be the median debt, which the most recent numbers put at right around two thousand dollars.  For those of us who aren’t statisticians, the median is a number that about half of the people with debt in the country owe more than, and the other half owe less than, this way a handful of people with an extraordinary amount of debt won’t throw off the average by too much.

The Good

The median debt is around two thousand, which makes the credit management of Americans seem a good deal better than the upwards of ten thousand that the national average figures out to be, in fact only about five percent or less of American households with credit cards are hovering above the national average.  A few other bright spots: nearly fifty percent of cardholders are well below the national median, more than fifty percent of cardholders use less than thirty percent of their total available credit and less than twenty percent have spent beyond eighty percent of their total limits.  This info on it’s own paints quite a different picture of the credit standing of the average American,  but that doesn’t necessarily mean that things are fine and dandy on the financial front.

The Bad and the Ugly

Even though the overall credit card debt problem facing Americans is quite a bit better than it sounds there still are some pretty glaring negatives to report:

Nearly two/fifths of cardholders who owe more than the national average (around ten thousand dollars) have an annual income of less than fifty thousand dollars, and nearly half of those people make less than thirty thousand dollars annually.

Bankruptcies have reached an all time high, and continue to rise every year and though the median of the total outstanding debt seems manageable at around two thousand dollars, that number continues to rise on a yearly basis as well.  If this trend continues, even the median debt will seem like a number that’s out of the control of a middle class card holder.

The average American seemingly has his or her credit debt in good standing and under control, but there are quite a few Americans who have gone well beyond a reasonable amount of outstanding debt.  The trend seems to be that more and more Americans are following a pattern of accumulating a higher average debt, but it still isn’t quite as bad as the public may be being led to believe – not yet anyway.