Which Parts Of The Country Are Carrying The Most Credit Card Debt?

Forbes wanted to know which states had the highest average balances per household in May, so they took the total amount of debt in 50 major metropolitan areas, divided that by the number of households, then divided that by the median household income for that area for May. Here are some of their results.

Consider the residents of Miami, Fla. The metropolis has fully felt the effects of the real estate crash, including a 12% decrease in hotel occupancy for the first quarter of 2009, an increase in unemployment to 8.5% in March 2009 and a 9% year-over-year increase in foreclosures for April 2009. Yet, on average, Miamians owe more of their personal income to credit card companies than those in any other area of the U.S.

While the median household income is a moderate $43,333—the national average is $50,233—average credit card debt in each home is $9,797.38. That means to pay off outstanding credit card bills, debtors would have to forgo 22.61% of their incomes.

Other areas where Americans continue to spend far more than they earn include Tampa, Fla., where the average household owes 17.1% of its total income; Los Angeles, where it’s 16.81%; Jacksonville, Fla., which owes 16.38% on average; and Orlando, Fla., indebted by 16.37%.

Other cities with higher than average debt ratios are Austin, Indianapolis, Charlotte, and Cleveland.

“Worst Cities For Credit Card Debt” [Forbes]
(Photo: Birdies100)

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  1. floraposte says:

    I don’t get that “yet” in the quote–seems to me that people in financial trouble are likelier to need to draw on credit, so it’s a logical correlation. It sounds like Forbes is thinking “so of all people, they should know better.”

  2. 6a says:

    I don’t suppose it’s any shock that four of the top ten are in the top ten for foreclosures as well.

    • jake.valentine says:

      @halah: The only shock for me is that ONLY four of them are on both lists. I would have thought there would be a higher correlation.

  3. SirNotAppearing says:

    Ha, the Forbes list concludes each city’s statistics with the following link:
    “Read on for more on shopping and style, including best times to buy, what it costs to dress a star and the world’s most powerful luxury brands,” which links to their style page.

    Credit card debt is bad. Buy overpriced crap from our sponsors!

  4. SoFlaSnowMan says:

    Forbes need to hire a statistician to vet their work. Any time someone divides an average by a median and expects to come out with a meaningful percentage, you just know they haven’t a clue.

    • Anonymous says:

      How is a percentage of income a meaningful ratio anyways. Shouldn’t there be some consideration for cost of living, maybe the ration of debt to income minus basic median cost of food and shelter?

      It doesn’t matter, for example that average debt is 10,000 and median income is 44,000 if rents and basic cost of living costs you 20,000 just to have a roof over your head.

    • Andrew Farris says:

      @SoFlaSnowMan: I was about to point out how flawed this is when I got to the bottom of the comments and you had beat me. It is first of all mostly useless to look at median income when discussing debt because the discrepancy between wealthy and poor has diverged so far, and second truly terrible to use a median income and average debt over a metropolitan area. This is one of the worst constructed statistics I’ve seen in the news this month. It tells you that some people do in fact have credit card debt, and nothing more.

  5. u1itn0w2day says:

    South Florida – who figured …

    Not surprising though in ground zero for the housing bubble . There are probably still people carrying debt from the bubble simply trying to keep up with the Joneses . That and it’s big city living in in or near most Florida cities . They are no longer strictly tourist towns with cheaper areas of living away from the tourist areas . Higher prices & debt will be one of the legacies of the boom .

    The problem is the wages in Florida have not kept pace with the prices as shown by the percentage of income for debt .

    Florida is one of those states where your home is protected from bankruptcy as well which I’m sure many are aware.

    • Bryan Price says:

      @u1itn0w2day: South Florida? This whole fscking state you mean. Tampa, Orlando and Jax (my neck o’ the woods, er, palm trees) even. Now evidently I’m living in a house double the income of the median (it sure doesn’t feel like it), but we also carry 0% debt on our cards. It took awhile, but after we got married, I got the card balance paid off (instead of sending in the $1k that she was used to doing, unless she was feeling wealthy, and that was about what she/we were putting on the card at the time)

      And we’re down to less than 1/2 year of wages on the house, which helps also.

    • TEW says:

      @u1itn0w2day: The flaw in your logic is Florida has been hit very hard with real estate values. If you are already are declaring bankruptcy and your home is worth ½ of its original value why would you want to keep it? If I was in bankruptcy I would give the keys to the house back to the bank and rent for half the payment.

      • u1itn0w2day says:

        @TEW: Problem with renting is that many landlords are as hard on your credit rating as others . But at least in Florida there is still a large enough segment that still believes in cash . And there are plenty of units available for rent in failed condos , apartments & hotels .

        @RichasB: It’s not just Cubans it all the new immigrants in Florida and California that have been taken back by the costs of actually trying to live above board – they were ‘the fools’ that became legal and decided to pay everything from taxes to insurances . And like a true conspicuous consuming American citizen they WANT the American Dream NOW . The ‘ new citizens ‘ see whats going on and what they want .

        The problem is in Florida in particular is that the cost living has far exceeded the legal wages . That’s how areas like Miami built up so fast and crashed so fast with outside money people from higher cost of livng areas like New York . Many in Florida still ASSume that it is old south tourist town living and it’s not . It’s big city living . Alot of immigrants in particular never lived anywhere else in the US and have no idea what the cost of living was or is elsewhere .

        Many transplants as well get caught off guard trying to live or still think like they’re in a higher cost of living/higher wage area . Tack on something like hurricane insurance to your mortgage and you;ll be reaching for that plastic much quicker .

  6. odoketa says:

    I’m kind of embarrassed for Forbes here – talk about misreading data.

  7. RichasB says:

    I live in Miami so yeah, I am somewhat surprised. I thought that surely another place like Detroit would be worse than here, but no. My family and myself don’t really use our credit cards ever but I know the Cuban population in Miami is to blame for those statistics (I’m half Cuban, so it’s “okay” for me to say something unpleasant about them).
    The fact is that many Cubans (Especially the new generations) come off the boats from Cuba and land in America eager to prove they’re a success. Cuban people have a huge pride and arrogance issue and tend to live beyond their means. The best example of this is a man made infamous on the local news that was a self employed Ice Cream man (drives a van, that’s it, doesn’t own a company) and then bought a million dollar house in Royal Oaks. How a ice cream vendor would think this is a good idea pales in comparison to the dumbass bank who lent him the money without income verification (You sell Popsicles?!?! GTFO!)

    I think that’s part of the issue. Let’s not forget that Miami is the number one city (Taken from 2007 poll, correct me if it has changed) with police and political corruption. The school board superintendent makes 100k+ but they’re cutting teachers and funding left and right. Even his secretary makes around 80k-100k. That’s insane.

    So mix that with now the people who Can afford to pay are choosing NOT to pay because the bank will not renegotiate the mortgages even though house prices plummeted, so they don’t want to pay 2007′s market value in 2009′s depression (My 2F house went from 175k in 2001, 600k in 2007, & around 300k now).

    Soo many issues. At least my parents are a smart bunch. Since everyone is losing their homes, they have to rent apartments now, and now my parents have mysteriously decided to raise the rent on all their apartment. They retired very early and have made the likes of Donald Trump proud :D

    • henwy says:

      @RichasB:

      Eh, I’m just glad it’s harder for people to declare bankrupcy and discharge their credit card debts after hearing about crap like that.

    • sponica says:

      @RichasB: maybe the Miami Cubans are different from the population that is in and around Newark that I know. Of course the only ones I know were rich and successful before castro came to power, and then the only place they could go was Spain before they came here. Perhaps having money and losing it makes you more like the depression era folks..

  8. gStein_*|bringing starpipe back|* says:

    For example, in Charlotte, the March 2009 unemployment rate was 11.4%, up from 5.2% in March 2008. (As the headquarters for Bank of America, the city was hit particularly hard by the financial collapse.)

    I knew our local unemployment numbers had jumped, but not that much.
    (Charlotte is also the headquarters for the former Wachovia group)

  9. Mecharine says:

    Do they break it down by demographics? I have a suspicion that the Florida statistics are heavily loaded withe elderly.

  10. u1itn0w2day says:

    One of the statistics I saw in the article is one that I have heard for years and that is once you get ove 20% of your pay in credit card debt you’re in trouble . Because what winds up happening is that 20% of your pay really isn’t going for a physical item after a certain point it is simply interest and/or fees which can grow and grow unlike the price of your new TV .

    I’ve seen that 20% bantied about on the magazine and news shows for over a decade at this point . And I’m sure the credit card companies are well aware of that number .

  11. AustinJ says:

    Just to give a quick numerical example (which I also just posted on the Forbes site). Imagine there were 10 households, 9 make $50k a year, one makes $1mm. The average household income is $145k, the median is $50k. Now imagine each has credit card debt equal to 5% of their income. 9 families have debt of $2.5k, one has debt of $50k. Average debt is therefore $7.25k, median is $2.5k. If you divide average debt by average income or median debt by median income, you get 5% for both. However, if you divide average debt by median income (as they do in this story) you get 14.5%….

    • grapedog says:

      @AustinJ: Nicely done AustinJ! That will save me from trying to do the math mysel as I hate math.

      @GearheadGeek: Yeah, Austin(the city) is NOT cheap(as are either Round Rock or Georgetown. You get to some of the more outlying areas(30-45min +) outside of Austin and you can get to some of the places this article is talking about when it says low cost of living.

      I doubt that Texas as a whole has been killed by this housing adjustment as bad as many other places because housing in Texas has been cheap for a long long time.

  12. GearheadGeek says:

    I’m REALLY doubtful about their perspective on the topic when they point with surprise to Austin’s high debt numbers and then claim Austin has a low cost of living and housing.

    Relative to the coasts, Austin may have a low cost of housing, but relative to nearly anywhere else in Texas it’s ludicrous. The housing market there also doesn’t seem to be getting hammered as much as other similarly-inflated markets have, which I find interesting. The house I used to own in Austin is listed on the tax rolls for about 3x what I paid for it in 1993, and I felt like I did well to sell it for 2x in 2001 (when geek work in Austin was about as plentiful as groundwater in Phoenix.)

    It’s a nice town, but it ain’t a cheap place to live, it doesn’t surprise me at all that credit card debt is high there.

  13. Amy Reed Pulliam says:

    Wow. That is sad. The borrower is really a slave to the lender. Find Dave Ramsey and follow his program to get out of debt. It really works.