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Too Much Credit: A Stunning Graphic on Personal Loans & Credit Cards

in Money Basics, Pay Off Your Debt

This infographic was made exclusively for MvD by PersonalLoans.org, a Personal Loans Blog brought to us by the people behind the Consumer Media Network.

I really appreciate the effort that went into creating the actual graphic, dubbed “Too Much Credit”.  I thought the comparison of overall credit card transactions along side of percent of budget spent on food was fascinating.  :-)

What do you think?

{ 58 comments… read them below or add one }

Jessi January 22, 2010 at 10:17 AM

Wow….and holy crap too. That graphic just sits on my computer screen and stuns me.

I realized I would never again use a credit card when I was 19 and had $3,500 in debt (none of which I would like to point out is 100% my fault – I cancelled the cards, they didn’t do it and then charged me a fee when they took out a late fee and pushed me over my limit which then gave me another fee on top of that – so I got charged by them charging me – if that makes sense….)

But to see that the US spends that much more than on food just really stuns me. Especially if you look at the overwhelming amount of obese/overweight people in the USA – but I wonder if though the credit card transactions amount is large – what exactly is it being spent on? Clothes, entertainment, health care, perhaps even eating out (if that doesn’t count in the food category)?

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Credit Card Chaser January 26, 2010 at 12:37 AM

$3,500 seems like a pretty high number for it to be “none of which is 100% my fault” :)

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Paul MacPherson February 4, 2010 at 9:43 AM

Jessi,

> what exactly is it being spent on? Clothes, entertainment, health care, perhaps even eating out (if that doesn’t count in the food category)?

My two cents on what do Americans use credit cards for… that the rest of the world does not.

I live in Canada, but I did finish High School in New Jersey and did my University thing in DC, so I have a perspective on not so much the spending habits of America’s verses Canadians; but how we both transact the money.

America’s use their credit cards to buy everything everywhere. Restaurants, grocery stores, video stores; you name it if you spend money you use your credit cards as a mechanism to simplify the transaction (not use cash). In other countries debit cards have been around for a decade or more now. Not visa debit but a true debit card with no credit card affiliation (in Canada the inter banking system that does this is called Interac — http://www.interac.ca ) . You would be hard pressed in Canada to buy anything that did not accept your ATM (bank machine) card for payment. No interest charges, no ability to mistakenly over extend yourself on credit.

If you use your credit card for all transactions it gives you the ability to spend money you don’t really have (over extend). If you use a debit card, it does not. Most Canadians only use credit cards when there is no other option, or of they are on vacation (the source of most Canadians over extending themselves). It is the transactional convenience of the credit card (in my humble opinion) coupled with the ability to spend more than you really should that had lead to allot of American’s to much consumer debt.

Cheers,
Paul

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Jackie January 22, 2010 at 11:15 AM

That is a stunning graphic. I’d also be interested in seeing what the credit is being used for. Regardless I think people on the US and the UK have way too much debt as a whole. (Personally, zero debt is the right number for me, and we’ll be there as soon as we get the house paid off.)

I did have one more question though, were the annual incomes equalized in any way to account for other differences? For example, if the average annual household income in one country is $3000 but it’s $45,000 in another, naturally food expenses will be much greater proportionally in the low-income areas.)

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Baker January 22, 2010 at 1:17 PM

Jackie, I have no idea, however I assume they were not equalized. You point out an excellent reason for a big part of the statistical difference. :-)

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kosmo @ The Casual Observer January 23, 2010 at 11:01 AM

Not necessarily. Food expenses are not the same from country to country, so the numerator also changes from country to country. Countries where people eat out a lot and eat a lot of meat are bound to have higher food costs than countries that have a more vegetable/rice based diet. For example, look at the cost of a Big Mac value value. Give that money to someone in Bangladesh. How many meals can they buy for the same amount?

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Emily January 22, 2010 at 12:23 PM

I recognize that Americans have a terrible debt problem and that the majority live beyond their means. However, I’m wondering if the graphic is actually comparing the proper data. The loan figures are listed as “credit card transactions.” If this is the amount that people are charging on credit cards each month then it doesn’t necessarily reflect true debt. I know a lot of people use their credit card (ie. have a credit card transaction) to pay all their bills each month but they don’t carry a balance and pay off the card that month. Do you happen to know if they were just looking at the amount of transactions or the actual carryover debt?

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Baker January 22, 2010 at 1:19 PM

Emily, I think the information they happened to use in this one just shows overall transactions (not carryover). I’m not sure what is ‘proper’, I guess that depends on what you are trying to accomplish.

For this one, I think it just shows our own (America’s) gross market share of overall transactions. The second graph show more on the actual debt levels, etc…

There could be a million more graphs with a million different statistics. I thought this one was neat! :-)

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Fabian January 22, 2010 at 12:39 PM

I think the graphic is totally misleading. You can’t compare the countries like that because the usage of credit cards is totally different in these. In the US credit cards are normal. In Russia almost nobody has credit cards.

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Baker January 22, 2010 at 1:19 PM

Fabian, I think the point you made and the point the graphic creator is trying to make are … the exact same.

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Fabian January 22, 2010 at 1:34 PM

Aaah. I see.

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Kevin M January 22, 2010 at 12:42 PM

The first one really doesn’t mean much to me – they could have shrunk the green bars down to whatever size they wanted, but chose to show USA launching off the chart. There’s no correlation between the amount of CC transactions and food costs as a % in this case.

The second one is more telling – clearly some (most) people should not have credit cards. Are the $ in graph 2 inflation adjusted?

Graphs are nice to look at, but can be even more deceiving than regular statistics sometimes.

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Baker January 22, 2010 at 1:21 PM

I’m with you, Kevin. Data is a fickle thing. I like how this one was laid out, but it’s tough to form a black/white opinion on limited data presented in this way.

Fun, though. :-)

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kosmo @ The Casual Observer January 23, 2010 at 11:06 AM

“they could have shrunk the green bars down to whatever size they wanted, but chose to show USA launching off the chart”

Actually, it seems to me that the bars are correctly proportional. The US bar is 4-5X as big as the UK one (I’m just eyeballing this – I didn’t measure it with a ruler). This is fair because the actual amount is 4.36 times as much. To shrink the bars (for example, to make the US bar twice as large as the UK bar) would have been distorting the data.

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thisisbeth January 25, 2010 at 12:11 PM

I presume he meant shrinking all the bars so they were still proportional, but keep the US debt data on the graph area, rather than shooting off of it. Frankly, that would make the smaller bars harder to visually analyze, so I’d just prefer a larger graph area.

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Kevin M January 26, 2010 at 10:50 AM

Thanks thisisbeth, that’s what I meant. They were obviously going for dramatic effect with the US bar jumping off the graph, when they easily could have shrunk them all down proportionately and remained in the graph area.

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Kosmo @ The Casual Observer February 2, 2010 at 11:50 PM

OK, gotcha :) I’m so accustomed to seeing graphs that are improperly unproportional that I just jumped to that conclusion.

Wayne K January 22, 2010 at 12:47 PM

The food spending percentage in the first graphic is actually a bit lower that US spending on Food & Dining per Mint (8%) for 2009. And, when I drill in to my budget I spend 12% on food. Interestingly, I spend less than average (compared to other US Mint users) on dining out and more than average on groceries. I have found that while food is among the top 3 spending catagories its the toughest to control. I can buy a house and a car that I can afford and those expenses are realtively fixed over time. But, I have to pay attention each and every day to shave a few bucks off of the food budget.

The bottom graphic is what I would expect to see. We all know credit card balances are out of control (on average). Also, most Americans MUST have a credit card if they want to travel (rent a car, pay a hotel deposit). Finally, I always take a step back when presented with charts like this (different measures and items on the left vs. the right). The layout is arbitrary based on the spacing of the dollars/percentages and can look very different depending on the presentation.

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Baker January 22, 2010 at 1:24 PM

Wayne, I really agree with what you said about the toughest part of a budget are your large discretionary type of categories!

However, I strongly disagree with *most* American having to have a credit card. It’s not a must, it’s a want. Which is perfectly fine, but there is this illusion that you MUST have a credit card to travel, which is simply false.

But we are back to agreeing when it comes to the layout and spacing. I find the compilation of these type of graphics very interesting, though. I really like to see how the designers choose to lay it out. :-)

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Kathy Alice July 5, 2012 at 7:15 PM

Maybe having a credit card to travel is not a *must*, but it can be very painful to use a debit card. Eg. To reserve a hotel room, if you use a debit card, the money is actually taken out of your account rather than a “credit hold” with a credit card. I actually have been “double charged” on a reservation which means double the money came out, and this was for a reservation only! While this can happen with credit cards, it usually is corrected by the time you get the bill, but with a debit card you often have to wait days to get the money back. Same with cancellations. And your protection against fraud and theft is much less. So I’m with Wayne here, it’s pretty close to a *must*.

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John January 22, 2010 at 1:11 PM

The first chart is deceptive, in that it shows credit card transactions, not new debt. It would be good to see another element on the chart that shows how much of the monthly transactions are paid in full each month and one for NEW debt. For some people, the credit card is just a means to purchase an item when the checkbook or cash is not available and they pay off the card each month.

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Baker January 22, 2010 at 1:28 PM

I don’t think that it is ‘deceptive’ just because it shows something different than what you think it should. :-)

I get your point, but I don’t think it tries to pass itself off (it’s clearly labeled). The first graph is simply to show our familiarity with using credit in general. How much of an accepted part it is in our culture, etc…

I too would like too see a different graph though of what percentage of charges are not paid off in full. Maybe someone has one somewhere to share!

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Tyler Karaszewski January 22, 2010 at 2:04 PM

“Also, most Americans MUST have a credit card if they want to travel (rent a car, pay a hotel deposit).”

This is NOT TRUE. People, stop spreading this around, it’s completely wrong!

But really, the fact that America, with 300 million people is responsible for more credit card transactions that the UK with 60 million people or France with 65 million people is hardly surprising. Also the fact that people in poor countries spend a higher percentage of their income on food should be self-evident.

And the “Too much credit” title is completely arbitrary and judgmental. You could make a similar looking graph showing the amount of money spent on medical research. It’d be high in the US, proportionally lower according to population in in other first-world countries like France and the UK, and quite low in poorer countries. Then you could title the graph “Too much healthcare”. The fact that a number is big doesn’t imply that it’s “too much”. We’re not going to title a life-expectancy graph “Too Much Life”, are we?

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Gholmes January 22, 2010 at 2:37 PM

I second @ Jessie “holy crap”. Been 3 years of no credit card and 2 years debt free except the mortgage.

I wonder if the first graph contains debit card useage ran as credit?

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Wayne K January 22, 2010 at 3:06 PM

Baker / Tyler K,

My bad for stating “most Americans MUST have a credit card if they want to travel (rent a car, pay a hotel deposit)”. That statement is not true and I am familiar with Baker’s thoughts on the subject. I believe a credit card provides an overall value and convenience if managed properly. But its certainly a “want” and not a “need”.

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Betsy Talbot January 22, 2010 at 3:31 PM

I agree with Wayne K, our biggest budget problem is always food because it can be so variable. We finally split out restaurants from groceries in the budget so we could better track our spending and have really gotten this under control the last few months. We do spend more than the average American on food, but we also spend far less on everything else and have zero credit card debt.

A friend of mine still swears by the “envelopes” method of staying on budget – it is easy to see how you spend your money when have to pull it out of an envelope each time and document it. Easy to forget sometimes when you use plastic.

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Meredith January 22, 2010 at 5:48 PM

Interesting conversation here…

My family holds several credit cards – once upon a time we played the ‘transfer it to a card with 0% interest on transfers for a year’ game. But we’ve got that under control now. At one point a few years back, we had one card at 4.5% and one at 5.5% interest… which was awesome (if credit and credit cards rate on an awesomeness scale). But since they kept jacking up the rates, we cleaned up our act and carry zero balances. Now we get what we can out of our credit cards… airline miles, big ol’ dividend at REI… we just use them for the benefits.

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Adam Mayfield January 22, 2010 at 7:03 PM

The last chart is very interesting. That is a large jump between 1970 and 1977.

I know that I used to fall into the credit card debt category. The past two years of my life have been spent chipping away at my $5000 worth of debt. Might not sound like much but when work is scarce and you are trying to make vehicle payments. It’s not easy. I am happy to say that I am down to no credit card debt, no car/motorcycle payment, and only owe ~$700 to my dentist (no insurance).

To all the people…there is hope. You just have to want it more than whatever it is you are about to buy.

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rubin pham January 22, 2010 at 7:53 PM

i travel to china and vietnam recently. there they don’t have subprime mortgage like we do over here.
most people have at least 50% down. many pay cash for their home.
if they don’t have the cash, they just rent. this just makes a lot more sense to me.

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Kyle Crum January 22, 2010 at 8:58 PM

This isn’t too surprising. Credit cards are all too easy to get and to use. They employ the same trick that casinos use when they replace your money with chips: if you don’t actually see the money being spent, you don’t feel like you are spending that much. In addition, for a long time, credit card companies have been able to make monthly minimum payments so low that people can pay the minimum without ever touching the principal debt.

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Allan @ Rich Money Habits January 22, 2010 at 9:29 PM

At first glance, it may indeed look like US & UK is in too much debt. But I don’t think it tells the whole story. It may not even be a story of debt. The graph indicates the volume of credit card transactions against purchase for food only, so here’s what I think about the graph.

1) Credit card is heavily used in US & UK. Since credit card may be used to pay gas, utilities, shopping, gadgets, food, and more, it could be that only a small portion of the credit card purchases is spent on food compared to ALL the other transactions on the card.
2) Lower credit card transactions for China. Perhaps, most people are still paying with cash, which is the norm in most of Asia.
3) A high % of yearly household spent on food could mean that yearly household income is small in the first place, and most of it is spent on basic necessities such as food. Higher household income gives you opportunity to spend on discretionary spending called “wants” (like LCD TV, gadgets, etc) hence decreasing the % spent on food compared to overall spending.

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Richard | RichardShelmerdine.com January 23, 2010 at 5:30 AM

Great and visually stunning information. I’m really impressed! I thought we had it bad over here in the UK but Sheeeesh :). Seriously though. Just simplify what you need and find happiness with what you have. Problem solved.

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Melissa Gorzelanczyk January 24, 2010 at 3:48 PM

Eye opening!

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Don@MoneyReasons January 24, 2010 at 7:44 PM

These statistics are a bit deceiving. Over 50% of american have either no credit card or pay their balance in full each month… Averages are just sensationalism with respect to credit cards… The true stat. to use is the median credit card balance, which was around $1,900, but probably is lower now after the “Great Recession” took hold. After all, a $10,000 or $15,000 balance for someone how makes $500,000 is an insignificant balance…

I’m one of those credit card holders that pay my balance in full each month. So I use my credit card for thousands of dollars worth of purchases every year! And I think it’s clever to do so! Here’s why:

1.) I utilize my cards to get a discount on the purchase of good via the rewards programs. Not using a credit card for these purchases, is paying extra money on the purchase. The key is that you have to have the disipline to manage your money!
2.) I don’t like carrying hundreds of dollars in my wallet. That’s just asking for trouble.
3.) I can contest purchases that are fraudulent, and not lose money on those transactions.
4.) If I lose my wallet, oh well, at least money wasn’t in it. I just call the credit card company and they issue me a new card…

There are lots of smart reasons to use credit vs cash. You just have to be smart about how you use the cards, and live beneath your means…

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Credit Card Chaser January 26, 2010 at 1:47 AM

but..but..but.. you mean that I would then actually have to take responsibility for my own actions instead of blaming my poor spending choices on the credit card company if I racked up credit card debt? ;)

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Gwen @ Frugal-Bugle.com January 24, 2010 at 9:22 PM

Living in Canada, I would have thought we had just as many credit card transactions. Surprising. Perhaps because our housing market has not had the crash, we’re not dipping into plastic as much. Great blog.

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Live for Improvement January 25, 2010 at 2:53 PM

………………………!!!!!
[I'm speechless]

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Robert January 25, 2010 at 6:29 PM

Reminds me of I.O.U.S.A.

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Playstead January 26, 2010 at 3:57 AM

My God, that really is amazing. I’m hoping this is the decade of responsibility for both the government and us. Everyone has a lot of work to do.

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Bytta@151 Days Off January 26, 2010 at 4:33 AM

UK population = 61.4 million
France population = 62 million
USA population = 304 million

I don’t think US is proportionally ‘that bad’ (per capita) compared to the other developed nations.
Still, not a good excuse to let oneself sink in bad debt.

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Steve February 2, 2010 at 12:41 PM

The maker of the graph wants to correlate food spending and credit cards, fine, whatever floats their boat. But to show the credit card spend in raw dollars, and not even per person… what’s the point? It’s a nearly meaningless number when presented that way. And furthermore it’s not given as a percentage of income like the food is. The two numbers being graphed aren’t even in the same unit!

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Bridgette January 26, 2010 at 3:39 PM

I wish that the values in the top graph were both in the same units. Its would be nice to see a value in $ for food spending instead of the percent. But it is very interesting, and after a while of staring at it, I figured out that they were trying to say that percentage of the total credit card spending was on food. The graph can be interpreted in a couple of ways though..

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Paul @ FiscalGeek January 27, 2010 at 12:43 PM

It burns!!!! Frightening statistics. What I’m very interested to see is the next couple of years when they have data for 2009-2010 and see if it’s changed at all with some of the basic economic lessons the recession has taught us. I sure hope so.

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soultravelers3 January 27, 2010 at 10:23 PM

Wow, stunning and sad to see. I learn the credit card & debt lesson very early in life which I’m very grateful for, thus I’ve always been an American who has almost never uses credit cards & always pays them off immediately if I must use one for some reason.

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Fantasia Lillith January 29, 2010 at 3:50 PM

Stunning. I just sat here and … well I couldn’t get my head wrapped around it. I realise now perhaps why we (as a non US citizen) have survived this economic “crisis” better. If I was holding that kind of debt – I’d be in serious trouble. Graphs may well be fickle – but they can help to psychologically visualise what a credit habit can do to an entire nations economy – not to mention the international platform.

Thanks for this.

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Dollars Not Debt January 31, 2010 at 12:24 AM

How many credit cards could the average person get if they really wanted to? 50, 100? The system is very broken. The system is asking for failure. Be weird!

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Mama Zen January 31, 2010 at 11:54 PM

Wow… holy crap! :S this is stunning, especially to see the percentage of household expenditure for food… I just finished the book ”Cheap” by E. Ruppel Shell and she even linked this low expenditure on food with the obesity problem in US. Lots of things to think about when you look at theses graphs… thanks for sharing those!

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My Crossover Point February 1, 2010 at 6:34 PM

I’m not sure what the first graph is trying to say. There is absolutely no way to relate the two bars. I assume the credit card transactions (in billions) are on a yearly basis, though that is not specifically indicated. That’s not a per person number, however the percentage on food is.

The credit card numbers are transaction data, not debt. What is it trying to communicate? The U.S. accounts for 40% of the world’s credit card transactions. What does that have to do with spending on food?

People in other countries spend a higher percentage of their income on food, but are able to do with without using a credit card. I’m neither shocked nor awed.

Now the second graph…that is sad.

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Tracy February 1, 2010 at 8:06 PM

Holy Crap!
Sorry that’s all I could come up with when I looked at that graph. Stunning.

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Paul MacPherson February 4, 2010 at 9:54 AM

Hi Baker,

I think the first chart may be accurate but a little miss leading.

You know what they say you can make number say anything.

I will take the two numbers that are important to me (being a Canadian) from the chart; the US at 1,693 billion in credit card transactions versus Canada at 187 billion.

These numbers appear to be gross totals for each of the two countries. But if you do some rough per capata math; America has 10 times the population of Canada but only 9 times the amount of Credit card transactions. That means from a per person stand point Canadians actually spend more on their credit cards than Americans does. Using simple eyeball math; Canadians actually spend 10% more with credit cards (per person) than Americans do.

Just my 2 Canadian cents (or about 1.3 cents USD).

Cheers,
Paul

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Adrienne February 4, 2010 at 5:02 PM

I spend between 2-3k a month on my credit card, but pay off the balance every month. I agree with Don@MoneyReasons. I use the card to get discounts as well as protect me when I make purchases. And if my purse is stolen – a card can be canceled…cash cannot.

I can see that a lot of people are angry with the credit card companies for making it so easy to get into debt – but ultimately it is not the fault of the credit card company. You made the choice to get the card and take advantage of it. The credit card company is providing a service. You can take it or leave it. It comes down to you making the right choice with your finances. Teach your kids about money/saving/etc early on!!

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Jamel Finsurance February 6, 2010 at 8:19 AM

Americans use their credit cards to buy everything everywhere, If you use your credit card for all transactions it gives you the ability to spend money you don’t really have. If Americans have the ability to spend more than you really should that had lead to allot of American’s to much consumer debt.

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JN Urbanski February 8, 2010 at 10:14 AM

I’m surprised that people are surprised to be honest! In the last thirty years, maybe more, the entire spending ethos of the West has evolved into a debt-based one. It has ruined the economy. This recession has been a blessing in disguise, if it overturns the “buy now, pay later” idea.

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vince February 27, 2010 at 8:35 AM

whoah! Thats really an eye openner.
But I wonder if that also took into consideration that Americans are also the largest consumers of global production.

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Fair Trade February 28, 2010 at 6:57 AM

Sometimes a picture is worth a thousand words… if we assume food spending is a good indication (as I’m sure was intended as such) then we see just how little of our spending in the US and UK is absolutely necessary.
It would be interesting to see the credit card debt factored in as well as spend.

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Amanda April 26, 2010 at 2:53 PM

I didn’t reaf every single comment but I wondered if anyone brought up this idea about debt in the US. I live in Austin, TX. When you pay with cash in the US, it has a very negative connotation. People see you as “poor.” The insane consumer culture that focuses on spend, spend, spend and tells you that plastic is your best friend is labeling the smartest consumers (those that pay in cash) as “poor” and to be looked down upon. It’s strange to think that I pay for groceries in cash and my best friend sells a house every 3-5 years so she can pay off $10-20 THOUSAND in credit card debt and add that debt to a new mortgage. According to US culture, she’s “well-off” and I’m “poor” even though my net worth is triple hers. So backwards.

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MoneySolve May 10, 2010 at 9:11 AM

Wow, the US really accounts for 40% of the world credit? Terrifying stuff!

Here in the UK there are now more credit cards than there are people so it doesn’t seem that we are too find behind the States!

I still maintain that so much of this could be stopped by making credit and money management classes compulsory in schools! Children leave school without ever having been taught about finances and they walk out into a world where it’s all too easy to get a credit card! Why should we be surprised that the result of that is worryingly high credit card debt?

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Terry August 19, 2010 at 12:08 PM

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