Are Americans More in Debt Than the Rest of the World?

Americans have a global reputation for being a) bad at soccer (futbol) and b) good at spending money they don’t have. Looks like it might be time to challenge both conventional beliefs.

As the surprisingly game Americans took the “pitch” on Tuesday against Belgium, many observers conceded that the U.S. team rightly earned its spot in the final 16, successfully fighting through the “Group of Death” and edging out traditional power Portugal. Despite losing 2 – 1 to Belgium, it’s clear that U.S. soccer is no longer a laughing matter.

The rest of the world should probably stop laughing at Americans’ credit card spending habits, too. Compared to traditionally more frugal cultures around the globe, the image of the overspending Yank isn’t only unfair, it’s inaccurate. According to the Organisation for Economic Co-operation & Development, U.S. household debt as a percentage of disposable income puts the Americans smack in the middle of OECD nations competing at the World Cup. And U.S. household debt has been on a steady downward trajectory since the economic crisis — not true of many other nations.

The OECD’s household debt ratio compares all debt families have — including mortgages — with their net disposable income. (More on the data here.) Higher numbers mean more debt. A number over 100 indicates debts higher than income, though that’s not surprising when mortgages are included.

It’s true that Belgium, the U.S. opponent on Tuesday, soundly beats the Americans on debt levels. The Americans’ debt ratio was 114.9 in 2012, the latest year available, while Belgium’s was 98.2. But Belgian’s debt is up from 78 in 2008, while the Americans is down from 134 that same year. In this respect, the Americans are trending in the right direction.

Several nations who qualified for the final 16 are included in the OECD data. The Dutch squeaked by Mexico this weekend, which must be a good distraction for their homeland. Known for their frugality, the Dutch are currently being crushed under a mountain of household debt — mainly mortgage debt. Their ratio is 311.5, easily the highest among OECD nations.

The U.S.’s 114.9 ratio would whip the Swiss (201.2), lose a squeaker to Greece (109.7) and France (104.5), and lose rather handily to Germany (93.2). That balance sheet result oddly parallels results on the pitch, no?

Among the six other World Cup participants covered by the OECD data, the U.S. would enjoy a solid 4-2 record when comparing debt levels. The Yanks would beat Spain (141.1), Japan (131.5), Portugal (147.6) and the United Kingdom (151.5) while losing to Australia (92.8) and Italy (94.4). It should be noted that 19 of the 32 World Cup nations are not included in the OECD data.

As with all economic data, like all sports results, there are flaws in the calculations. A lower household debt ratio doesn’t necessarily mean a stronger economy or a less greedy population. But as with this year’s results with the World Cup, the numbers certainly indicate Americans probably aren’t the unsophisticated soccer players or spenders we are made out to be.

There is one major caveat in the OCED report, however. All debt is not created equal. Most economists (and people, too!) would agree that high-interest credit card debt is far worse than low-interest mortgages. You’d think that a nation with more of one or the other might be greater or lesser trouble. On this score, the Americans do in fact rank badly. Among 26 OCED nations, long-term loans like mortgages make up more than 80% of total household debt, and in 10 countries, it’s 90%. In the U.S., it was only 70.7%, meaning nearly one-third of Americans’ debt is short-term loans, like credit cards. Ouch. Only Italy, at 69.9%, was worse. On this count, the U.S. still has some catching up to do.

On an individual note, debt can also have a big impact on your credit — good or bad. You can check your credit reports for free once a year from each of the three major credit reporting agencies through AnnualCreditReport.com, and there are free services, like Credit.com, that will let you see your credit scores, too. You can learn a lot about how your debt affects your credit standing by checking your credit reports and scores regularly.