Florida is 9th in the U.S. for most credit card debt. Here's how to pay yours down
It's not cheap to live in Florida anymore. (Was it ever?)
Forbes listed Florida as 4th in the top five states struggling with credit card debt in the U.S., based on average credit card debt, debt as a percentage of income, delinquency rates, and year-over-year changes.
According to household debt statistics released in May by the Federal Reserve Bank of New York, Florida ranks 9th in the country for states with the most credit card debt, with an average of $3,940 per borrower as of the end of fiscal 2022. That's an increase of 8.35% over the end of 2021. The data was gathered through a random sample of about 5% of Americans with credit report information from the New York Fed Consumer Credit Panel and Equifax.
If you take an average of all student loan, auto, credit card, and mortgage debt added together, the statewide average total debt for borrowers in Florida is $56,600. That's actually about average for the U.S. since that puts us at #23. The national average total household debt as of December 2022 was $59,580.
"Florida is the state with the highest credit card debt relative to income at 6.60%," Forbes' Michelle Black said. "The Sunshine State also has the third credit card highest delinquency rate at 9.37%." But she added that it was a "considerable improvement" over last year, with the delinquency rate dropping by 12.10% from the end of 2021.
According to Forbes, our credit card struggle comes after the District of Columbia (highest credit card debt nationwide, $4,660, with a sharp rise in delinquency), Nevada (second-highest credit card debt as a percentage of income) and Texas (fourth-highest delinquency rate, seventh-highest credit card debt as percentage of income.).
What are the states with the highest household credit card debt?
Alaska took #1 on the list, with an average of $4,430 per borrower. The top ten are:
Alaska - $4,430
Hawaii - $4,260
New Jersey - $4,220
Maryland - $4,190
Connecticut - $4,040
New York - $3,970
Virginia - $3,960
Colorado - $3,940
Florida - $3,940
California - $3,870
"The average amount of debt per person has slowly crept up year by year," said a spokesperson for the financial site Moneywise in a release about the list, "and this cycle will continue as prices for everyday goods simultaneously increase too. According to the Consumer Financial Protection Bureau, Americans pay nearly $120 billion in credit card fees and interest a year.”
How much do Americans owe in credit card debt?
"Consumers in the U.S. carry a combined total of $986 billion in credit card debt as of Q4 2022," Black said, a $131 million increase over 2021.
Why is it so expensive to live in Florida?
Florida's economy was ranked the best in the nation in CNBC's "America's Top States for Business" for 2023. A surge in employment, mostly from the leisure and hospitality sector, and a record number of visitors in the first quarter of 2023 was good news for the business sector. The state's bond rating from Moody's/S&P is "AAA, Stable" and the Tax Foundation ranked Florida, the fastest-growing state in the U.S., in the Top 5 states for business-friendly practices for the 10th year in a row.
Florida also has the highest inflation rate in the country. Soaring housing prices, a spike in interest rates, and an insurance crisis that has homeowner insurance premiums skyrocketing to almost three times the national average and homeowners wondering if they can do without. Grocery prices have risen by 4% since May 2002, according to the Bureau of Labor Statistics, and the exodus of many immigrant workers in response to Gov. Ron DeSantis' new immigration bill may drive them even higher.
Florida also has the third-highest amount of federal student loan debt in the U.S., over $100 billion as of Dec. 31, 2022, according to the U.S. Department of Education's Federal Student Aid site, and student loan payments are about to begin again after the Supreme Court ruled against President Joe Biden's plan to eliminate $400 billion in student loan debt.
How can I get rid of my credit card debt?
It can be daunting, especially on a tight (or non-existent) budget. But there are some simple guidelines from USA TODAY's Blueprint to help you make a dent in your debt.
Pay more than the minimum. Paying only the minimum every month keeps you in debt longer. And after 10 rate hikes by the Federal Reserve in under 18 months, the average rate on credit cards has soared to 20.58%, up from 17.01% last year. Throw some extra money at it, even just a little, to drive the amount down.
Make a budget. Budgeting helps you find out where you're spending money you don't need to and how much you can apply to your debt.
Pay your cards more frequently. If you can make payments weekly or biweekly, treating it more like a debit card than a credit card, it can help you manage it better, and keep it from ballooning up too quickly.
Consider transferring your debt to a card with a better interest rate. Many balance transfer cards offer 0% intro APR for six to 21 months, which can help pay down your debt faster since payments are going toward the principal instead of interest. You'll need a good credit score and most cards charge a balance transfer fee,
Consolidate your debts. If you have multiple credit cards, use a consolidation loan to roll all your bills into one, simplify your bills, reduced your monthly payment and lower your interest rate.
Contact your debtors and ask for help. Some credit card companies may be open to lowering your interest rate if you've been a good customer, but you'll have to call and ask. You also can ask to change the due date to one more convenient for you.
There are two basic strategies for paying down debt, snowball vs. avalanche. In both cases you continue making minimum payments on all your cards but you throw extra money at one of them. The debt snowball method is when you pay off your credit cards from smallest to largest so you eliminate the smaller balances and see faster progress. With the debt snowball method, you pay off the cards with the highest interest rate first to save you the most money in the long run.
The best method is... whichever one works for you, honestly. Paying any extra at all on your cards is good no matter how you decide to do it.
If you are completely foundering, talk to a credit counseling company to help develop a budget and a plan to pay off your debt. The agency will negotiate with your creditors to lower your interest rate and monthly payments, but you will have to commit. There are also apps such as Debt Payoff Planner, Qapital, Oportun, Mint, and Undebt.it that can help you develop budgets and payoff plans.
Theresa Stevens and Robin Saks Frankel of USA TODAY's Blueprint contributed to this article.
This article originally appeared on The Daytona Beach News-Journal: Credit card debt list ranks Florida 4th in top five states struggling
