The Cost of Consumer Debt in Florida: Part I

The level of consumer debt in Florida is among the highest in the country.  Floridians are among the most indebted in the U.S with huge mortgage debts, student loans, auto loans and credit card debt that is higher than the average for the whole nation.  There are many factors that are causing this bad trend and preventing consumers from making a full recovery from consumer debt in Florida.

Consumer Debt in Florida

State Laws on Consumer Debt in Florida

State laws on consumer debt in Florida do not provide any further protection for consumers apart from reiterating what the federal laws state.  There are no safeguards against identity theft and consumers don’t receive any credit card protection.  The very few laws that the state of Florida has for protecting the financial rights of consumers, such as the Unfair Trade Practices and Deceptive Act, do not help much beyond reinforcing the rights already granted by the federal law.  Although there are comprehensive consumer protection federal laws, consumers in Florida are left vulnerable due to lack of state legislation.

High Unemployment

Consumer debt in Florida is made worse by high levels of unemployment among Floridians.  In fact, the unemployment rate in Florida transcends that of the nation.  In early 2010, unemployment in the state was 11.4 percent and only after two years did it drop below 10%.

Let us now look at the consumer debt in Florida in detail.

Credit Card Debt

In 2011, people in Florida with credit card debt had an average of $6,658 on their cards.  This figure was lower than a year before when the debt was $1,068 more.  A study in 2012 put the average national credit card debt at $6,576 and Florida’s average credit card debt was still slightly above that of the national average.  In 2011 the credit bureau Experian conducted another study which concluded that residents of Jacksonville accounted for the second-highest credit card debt holders in the nation.  Consumers in this area had around 22 percent more credit card balances of over $5,000 than the national average.  Averages in this study by Experian seem lower with the average consumer in the nation having a balance of $4,200 debt on their credit card, because the study calculated averages using the total number of consumers rather than the number of people who have credit card debt.  In addition, Miami ranked 23rd and Tallahassee 14th on the list of 25 cities that have the most credit card debt.  Consumers in Tallahassee had around $4,600 of debt on average while consumers in Miami had around $4,555 of debt on average.  This significantly adds to the consumer debt in Florida.

Mortgage Debt

There was a 6 % decrease in the average mortgage debt in Florida between 2010 and 2011, as the figures dropped from around $174,000 to $160, 000.  However, this reduction could represent an increase in foreclosures rather than indicate that those with homes are paying down their mortgages.  The mortgage situation in Florida is still seen as the worst in the nation despite the small improvement.  Homes in Florida lost 48 % of their market value after the housing market crash in 2007.  Nearly half of mortgages in Florida were still undervalued in May 2012 as a result of this.  To put this into perspective, nearly half of mortgage debts in the state had balances that were greater than the actual worth of the mortgaged homes.  Delinquencies have also increased dramatically.  Only 0.64 percent of the mortgages in Florida were more than 90 days past due at the end of 2005.  This figure increased by 28 times more in less than seven years later so that by May 2012, over 18 percent of mortgages were at least 90 days overdue.  This is a significant problem to the consumer debt in Florida.

Student Loan Debt

According to undergraduate enrollment for the year 2011-2012, the state of Florida houses three of the 10 biggest universities in the nation.  Florida International University, University of Florida and University of Central Florida have a total undergraduate enrollment rate of over 32,000 each.  This could in part be because of them being among the most affordable public universities.  It seems that in recent years even the most prudent students in all these three universities have not been able to avoid student debt, as undergraduate students now graduate with average student loan debts of over $16,000.  This figure is still lower compared with that of students who graduated from any Florida university with student loans in 2010.  Nearly 50 % of 2010 graduates from the three universities in Florida had accumulated student loans totaling $21,200 on average.  The figure for the average loan amount in the country is higher at $25,250 for 2010 graduates with student loans, making consumer debt in Florida a big problem.