Texans have been swiping their way into a heap of debt, with many now struggling to keep up with their bills. According to recent data from the Federal Reserve, cited by CBS Austin, Texas currently holds some of the highest rates of auto loan and credit card debt defaults in the nation. At a staggering 8.67%, Texas ranks fourth across the U.S., and surprisingly, this represents a downswing from previous years when delinquency rates hovered around 11%.
WalletHub's analyst, Jill Gonzalez, provided insights, saying "Year-over-year, we are seeing this number grow and grow. In 2020, we saw people pay off debt, but every year since, it's only [gotten] higher and higher,” as reported by KVUE. She noted inflation as a primary driver, with the Federal Reserve's increasing rates only exacerbating the problem, inflating Texans' average household credit card debt to over $9,200.
The economic squeeze has put pressure on lending practices and consumer confidence, impacting overall economic stability. Christie Matherne from WalletHub highlighted the broader implications, saying, "When we see delinquencies, we see people leaning on their credit a little more than normal." The effects of such defaults are not limited to credit scores alone, according to Matherne in her interview with CBS Austin. Falling behind in payments can have a ripple effect, making it harder for individuals to secure housing or other necessities tied to credit histories.
Stan Springerley, a bankruptcy attorney at Lincoln-Goldfinch Law in Austin, has seen an uptick in calls from individuals questioning if bankruptcy is their only option out of their fiscal binds. He recommended a tactical approach to tackling debt, advising, "Pick the lowest balance, get that one out of the way first, and then double up as much as you can on the next lowest balance and use that domino effect to give you encouragement to get out of debt," in a statement obtained by CBS Austin. Apart from strict budgeting, he suggested alternative income streams such as taking on a part-time job or renting out a room.
Seeking professional help can be a viable option for many. Todd Christensen, education manager with Money Fit, supported the idea by stating, "A nonprofit credit consumer agency you can go to is fcaa.org or nfcc.org," as he instructed those in debt during his interview with KVUE. And there's a silver lining: as WalletHub's Matherne suggests, with inflation showing signs of slowing down, there is hope for delinquency rates to continue their decline, especially in Texas.
