Miami Tops Nation in Credit Card Debt Growth
Thinking about leasing a new car, getting a new card, or racking up a few fancy meals during Miami Spice? Well, maybe think twice before putting it on your credit card. Two new analyses suggest that Miamians are drowning in credit card debt, and, in fact, the area leads the nation in growth of credit card debt over the past year and have a hard time paying it all off.
According to new numbers from Equifax, the total amount of credit card debt in the Miami area in the second quarter of 2015 rose 9.5 percent from the total in the same quarter of 2014. That's the sharpest rise in any of the 25 major metro areas. In fact, the national average was just 5.04 percent. In pure number terms, that's a total credit debt in the area of $9.85 billion, up from $8.99 billion just a year ago.
Equifax's news release thinks this is a good thing for the economy.
"Every major market has seen increases in credit card debt, even those cities where the housing market issues are not completely resolved," Assad Lazarus, interim unit leader of Equifax Personal Information Solutions, said in a statement. "This shows that American consumers are more confident about their financial futures, and that means the U.S. economy has entered an expansion mode."
But another recent analysis from CreditCards.com suggests that this sharp increase is not healthy for everyday Miamians. Its analysis found that Miamians take a long time to pay off that credit card debt. On average, it takes Miamians about 14 months to clear that debt, the fourth-highest rate of any metro area in the nation.
The median income for those older than 16 in the area is $27,453, and area residents average about 2.02 credit cards each and carried an average balance on all of their cards of $4,325 in 2014. The amount of interest racked up during the time it takes to pay those cards off was $351.
We should also note that the estimated time to pay off those cards is theoretical and based on consumers actually following good credit rules.
"The time it takes to pay that balance was calculated using 15 percent of the median earnings for each city, according to Census Bureau figures," the report states. "Fifteen percent of earnings is a rule of thumb used by some credit counselors to evaluate debt repayment plans."
So it's likely that a lot of Miamians aren't actually paying off their debt. It's just that if they were following good rules, that's how long it would take them.
As common sense would suggest, the analysis found that residents of cities with higher median incomes have an easier time paying off their credit card debt.
Any perceived economic recovery in Miami has left many residents behind. While glittering towers designed by world-renowned architects with unpronounceable names pop up all over town and help drive up average rents, Miamians are not only struggling to pay rent but also struggling to pay off their credit cards.
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