Predicting credit card debt

Drag over the diagram to see fitted values (for years 2001 and earlier) and forecasts (for year 2002 onwards).

Mention the poor fit of the fitted values for linear model and that the forecasts are likely to be too low.

Use a quadratic model and repeat, explaining that the quadratic model seems to fit well.

Warn against forecasting far into the future — the actual trend line may be neither linear nor quadratic.


The data set gives the total debt owed to credit cards in New Zealand at the end of each December from 1990 to 2001.