Creditcards.com is a great online resource, which provides statistics on everything related to credit cards in the United States. You may or may not be shocked to hear that data collected has shown San Antonio, Texas as having the highest credit card debt burden in the United States. This data was compiled through the use of average credit card balances, taken from Experian, as well as median earnings for the city, taken from the U.S. Census Bureau. Credit counselors believe that 15% is a reasonable amount that should be repaid on a debt. Not only does San Antonio top the list, but two other cities in Texas are in the top five, including Dallas/ Fort Worth and Houston.
Projections based off of 15%
Based on the statistics above, creditcards.com was able to calculate that it would actually take 16 months, and $448 in interest for a median-income resident to pay off the average credit card balance in the area. It would take over a year just to pay back the average balance, while accumulating a large amount of additional fees you pay toward the interest. The Dallas/ Fort Worth area was not much better with a 14 month pay off time, and $382 in accumulated interest. Houston, Texas was number five on the list of highest credit card debt burdens with 13 month pay off time and $363 paid toward interest. We all know Texas is a big state, but why are three of its major metropolitan areas struggling with credit card debt?
Possible reasons for the high credit card debt in Texas
There are many areas to look at it when it comes to determining why several Texas cities are ranked highest in personal credit card debt. Some believe that since Texas has such a strong presence of military individuals and families throughout the state’s population, a higher credit card debt is prominent. This is because those in the military tend to take on a larger amount of debt compared to civilians in the Texas area. Information on military debt can be found at the National Foundation for Credit Counseling website.
Another reason why Texas cities might be high on the list is because these cities tend to have an average to low median income. Families in the area with an average or low median income will spend a much longer time trying to pay off the balance. Individuals might also have more than one credit card, used in times of hardship. Multiple credit cards means more payments every month that some people with average or low incomes just cannot make. Texas is also high in other credit consumerism, according to title loans Austin.
Comparison to other cities
The average amount of credit card debt in each metropolitan area is right around the same number. Other major cities throughout the United States aren’t spending less on their credit cards than those in Texas. Because the average median income is lower throughout the three cities mentioned, it takes longer for individuals to pay back their debt. This is the biggest reason for Texas cities being the highest in debt. San Francisco was rated lowest in the Creditcards.com study. Compared to San Antonio, the average person in San Francisco will take 9 months to pay off credit card debt, while paying $234 in interest. So those living in San Antonio are taking 7 extra months to pay off debt, compared to San Francisco. That is a huge jump, but San Francisco does have a much higher median income in the city.
Ways for Texans to eliminate debt
Even though the Texas cities that made the highest debt burden have an average to low median income, it is important to stay on top of credit card debt. We all run into hardships, which is what credit cards should be used for. If you do not have the money to buy an item you don’t actually need, then do not use your credit card to purchase the item. Instead, look at other options such as layaway or a rent to own option. In only using your credit card for absolute necessity items, you are saving yourself from a monthly balance you might not be able to pay off. It is also important to note, that you should always attempt to pay off the full amount, and if this not an option, at least pay off the minimum balance.
Texas has three cities topping the list for highest credit card debt in 2015. Do you think we will continue to see major metropolitan areas in Texas top the list in years to come? What other reasons do you think might be behind the large credit card debt in Texas cities? It will definitely be interesting to look at changes for 2016, especially because of the presidential race.