A friend of mine quoted an alarming statistic about credit card debt to me recently. He said the average American family carries $8000 in credit card debt. Can that be so? Well … no, it isn’t exactly so. Although the figure has been quoted all over the internet for years, it is in fact highly misleading. It’s a mean rather than a median. If a few people have a very large debt, using the mean will make Americans look profligate in general. And I’m told the figure has a few other problems too, but I won’t go into that now ….

According to Money Central’s Liz Pulliam Weston, only 1 in 20 households owes $8000 or more in credit card debt. Most Americans have no credit card debt at all, and most household that do owe, owe less than $2000. She gets these figures from a Federal Reserve study from about five years ago.

I’m bringing this up because I’m wondering if there isn’t another way that these studies of credit card debt may systematically overstate the level of credit card debt in America. If somebody knows how these studies account for second mortgages with revolving credit, I’d like to know. Take my situation: When I bought the house I am living in now, I needed a mortgage that was somewhat larger than the cut-off for conventional mortgages. If I wanted just one mortgage, it would have to be a jumbo, which meant that it would be at a slightly higher rate. I opted instead to get two mortgages: a conventional one and a smaller second mortgage at a slightly higher rate for the excess. I did the math and it appeared to be a better deal than a jumbo loan. The second mortgage was essentially a revolving line of credit at a very favorable rate. And it came with a Visa card.

If this account made it into the credit card debt statistics, then it made me look like a sprendthrift. I did not pay it off quickly. For quite a while I carried a balance in the five figures. But I regarded it as just a piece of my ordinary mortgage debt (and indeed the interest rate was below 6% and tax deductible to boot.) I didn’t buy anything at Nordstrom with it. And my total mortgage debt is quite low for my income for Southern California.

How are these studies able to account for issues like that? I assume these things are becoming increasingly common, which would make keeping stats virtually impossible. If you include them in the credit card debt data, it’s highly misleading. They aren’t really credit card debt for borrowers like me. If you don’t include them, however, it’s also highly misleading, since I could have gone on a spending spree at Nordstrom with the account. And I’m sure some people have.

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