Californians and Personal Debt
In some ways, Californians appear to be in decent shape. They largely emerged unscathed from the 2020 personal debt crisis, and new mortgages soared last year. Further, unlike most of the country, levels of bankruptcies, foreclosures, and defaulted debt have been relatively low the last couple of years.
But that was then.
California residents now have an average credit card debt of $3,300, which slightly exceeds the national average. Moreover, their delinquency rates are also higher than the national average. Keep reading for more about Californians and personal debt.
Debt in the Golden State
It’s no secret that it’s expensive to live in California. Add some unforeseen personal situation that sets you back financially, and residents can find themselves in considerable debt.
In fact, Californians are getting crushed by debt. The average California household has more than $20,000 more debt than the average household in the United States — $78,320 versus $55,480. In addition to credit card debt, these higher levels are largely driven by mortgages, according to the Federal Reserve Bank of New York. The average California household carries $62,840 in mortgage debt compared to $38,830 nationally.
While delinquency rates for student loan debt, vehicle loans, and mortgages are lower than national averages, California also has a relatively higher delinquency rate for credit card obligations. The percentage of payments that are more than 90 days late is 9.07% in California versus 8.22% nationally. Tardy credit card payments are frequently the first indication of financial woes.
Reasons for California’s Debt Challenges
When it comes to median rents or home prices, Hawaii is the only state that tops California. And California’s unemployment levels exceed the national average. As of April, the state’s jobless rate was pegged at 4.6%. That’s compared to the national average of 3.6%. And now we have historic inflation levels and rising interest rates that make it more expensive to borrow. All this means that many Californians are in trouble financially and may need assistance such as debt settlement. For that, we recommend Freedom Debt Relief, a reputable and experienced company that can help put them back on track.
The Bigger Picture
The experiences of Californians who are having a rough time are not easily sorted by geography, income, or race. Naturally, well-to-do Californians are faring relatively well, debt-wise, a fact that skews statistics. There are indeed high numbers of Californians who can’t make rent or pay their utility bills, and who are forced to borrow cash from relatives or take out predatory loans. When it’s all said and done, the storyline may well be one of inequality.
As of last winter, roughly 1.6 million California households were behind on their water payments, and the number of residents who were late on their rent payment ranged widely from 90,000 to 700,000. According to the U.S. Census, 14% of California residents reported that they borrowed money from family last January.
Further, California residents who had credit scores north of 760 accounted for 85% of the nationwide hike in new mortgage debt. Such residents tend to have higher incomes. By contrast, mortgage balances dropped among those who had scores under 620.
Another issue is that federal data don’t gauge the number of Californians who have been without financial assistance for long stretches because they’re undocumented or have experienced frozen or delayed unemployment benefits. Such statistics also exclude those who, due to thin or poor credit histories, are forced to turn to predatory financial services to pay their debts.
So, yes, when it comes to personal debt, many Californians are struggling. Credit card debt – a particular issue among residents – is an unhealthy type of debt because it doesn’t produce wealth. As we mention above, if you need help with unsecured debt such as credit cards, Freedom Debt Relief is your best bet.