Erin El Issa

NerdWallet

It’s not uncommon to fudge some of life’s most sensitive numbers, such as age or weight.

But according to a NerdWallet study, consumers aren’t just fibbing a little when it comes to their credit card balances. In fact, government data show them reporting a total of $415 billion less than they actually owe.

As of December 2013, lenders reported about $683 billion in outstanding credit card debt, according to the Federal Reserve Bank of New York. Borrowers, on the other hand, reported only about $268 billion when asked for the Federal Reserve’s 2013 Survey of Consumer Finances. This disparity was greater for credit card debt than any other type of debt, including student loans and mortgage debt.

When NerdWallet dug into the reasons behind this reporting difference, it found that the stigma surrounding credit card debt may be a leading cause of underreporting.

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The stigma of credit card debt

Part of the $415 billion discrepancy can be explained by unintentional underreporting on the part of consumers. They may not know how much debt they have, or they might not be reporting debt they’re planning to pay off in the near future. But based on NerdWallet’s survey results and the significance of the disparity, it seems likely that a large portion of this underreporting is intentional because of the stigma credit card debt carries.

According to NerdWallet’s survey results, 70% of Americans think credit card debt has a greater stigma than any other type of debt. Mortgage and student loan debt is often considered “good” debt, while credit card debt is “bad” debt. It also may explain why consumers are underreporting their balances: They’re ashamed of them.

In fact, NerdWallet found that 35% of Americans would be embarrassed to tell others they have credit card debt, significantly more than for any other type of debt. What’s more, Americans are more likely to hide credit card debt from their friends and family than they are to hide plastic surgery, losing their job or being broken up with.

Credit card debt isn’t ideal, but it shouldn’t be a source of shame. Ignoring or denying your balances can lead to poor credit scores, which can negatively affect the interest rates you pay, your insurance costs and more. Instead, consumers should accept their debt loads — no matter how large they might be — and work to eradicate them.

How to pay off your credit card debt

If you’re carrying credit card debt, aim to pay it off as quickly as possible — not because of the stigma, but because it’s expensive. Credit card interest rates are often the highest among debt types, costing an average of 18% per year.

The first step to paying off your debt is figuring out how much you have. Log in to each of your card accounts and note the balance, interest rate, minimum payment and due date. If you aren’t sure of all your accounts, go to AnnualCreditReport.com to get your free credit reports. They’ll have a list of your active accounts for reference.

Once you know how much debt you have, you can begin paying it off. List your debts from highest interest rate to lowest. For each account except the top one on your list, make the minimum payment for now. Throw any extra money at the highest interest rate debt until it’s gone, then move on to the next balance on your list.

If you don’t have room in your budget for extra payments, or you wish you could pay your balances down faster, it’s time to cut expenses or increase your income. For ideas on how to do both, read about getting more money to pay down debt.

In addition to ridding yourself of the exorbitant interest costs that come with credit card debt, paying off your debt for good will free you from the shame you might feel from having balances in the first place. No matter what your motivation — financial, emotional or both — eliminating your credit card debt is smart.

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Erin El Issa is a staff writer at NerdWallet, a personal finance website. Email: erin@nerdwallet.com. Twitter: @Erin_Lindsay17.

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