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According to the New York Federal Reserve’s most recent Household Debt and Credit Report, credit card debt and other household debt is on rise nationwide. Here’s how debt is changing in the U.S., how it’s impacting people in their 30s, and how Los Angeles and the rest of California compare with the national averages.
Household Debt at the End of 2022
In the last quarter of 2022, Americans were carrying $16.9 trillion in aggregate household debt. People in their 30s account for about $3.8 trillion, or more than 22% of that debt. While mortgage debt makes up the largest percentage of 30-something household debt, they have a higher percentage of credit card debt than Americans 40-49, 50-59, 60-69 or 70+. Only those 18-29 have a higher percentage of credit card debt.
Californians have more than their share of debt overall, with an average per-capita debt of more than $80,000. The national average is about $60,000. This doesn’t necessarily mean Californians are carrying more credit card debt than those in other states, though. In fact, credit card debt makes up a lower percentage of the per capita debt in California than in some other states the Federal Reserve looked at. The disparity in total per capita debt is largely attributable to high mortgage debt in California.
Credit Card Debt is Increasing Across the Board
In the first quarter of 2003, people in the United States were carrying a total of $690 billion in credit card debt. That’s a big number, but it pales in comparison to the aggregate 20 years later. At the end of 2022, outstanding U.S. credit card debt stood at $986 billion–a 42.9% increase across the past two decades.
California Cities on the “Most Unsustainable Credit Card Debt” List
Los Angeles made the top 100 for cities with unsustainable credit card debt, and it was far from alone in California. These aren’t necessarily the cities with the highest median credit card debt. Rather, researchers calculated payoff time based on both median credit card debt and median income in the area. “Most unsustainable” means the longest anticipated pay-off time.
LA came in at # 72, with median credit card debt of $2,710, a median payoff time of 53 months and eight days, and a median cost of $1,176. Other area cities on the list include:
- San Bernardino, CA: #50 with a median credit card balance of $2,212, a median payoff time of 56 months and 24 days and a median cost of $1,024
- Ontario, CA: #59 with a median credit card balance of $2,462, a median payoff time of 54 months and 22 days, and a median cost of $1,095
- Riverside, CA: #67 with a median credit card balance of $2,620, a median payoff time of 53 months and 23 days, and a median cost of $1,143
- Santa Ana, CA: #68 with a median credit card balance of $2.095, a median payoff time of 53 months and 22 days, and a median cost of $913
- Fontana, CA: #74 with a median credit card balance of $2,584, a median payoff time of 52 months and 20 days, and a median cost of $1,102
- Long Beach, CA: #75 with a median credit card balance of $2,840, a median payoff time of 52 months and 18 days, and a median cost of $1,210
Santa Clarita residents have the highest California credit card balances on the list (a median of $3,830) and the highest payoff cost, at a median of $1,602.
30-Somethings and Credit Card Debt
There’s been a lot of reporting about how credit card debt is “skyrocketing” among people in their 30s. It’s certainly true that the amount of debt overall and credit card debt specifically people in this age group are carrying has increased. But, people in their 30s are still carrying less credit card debt than those in every age group older than them. And, when looking at aggregate balances, it’s important to remember that this is the largest sector of U.S. adults.
30-somethings are carrying a little more than 22% of the total U.S. household debt, and that’s up a bit from three years ago. But, it’s not disproportionate to their representation in the population.
Still, there are reasons for concern about the amount of credit card debt this age group is carrying and the increase. First, the average credit card debt a Millennial is carrying has increased by 26% over the past few years. During that same time, other age groups saw smaller increases, or no significant increase at all. More importantly, it seems many 30-somethings are finding that debt unmanageable.
Credit Card Delinquency Among 30-somethings
The Household Debt and Credit Report referenced above shows that nearly 6% of the total credit card debt held by people in their 30s transitioned to serious delinquency in the last quarter of 2022. That means that debt was 90 days delinquent. And, it’s not just credit card debt: nearly 3% of the total balance on auto loans held by this age group went seriously delinquent during the same time period.
For comparison, these delinquency rates for both credit card debt and auto loans were significantly higher than the rates for all age groups 40 and up. The only group with a higher rate of transitions to delinquency was those aged 18-29.
Managing Credit Card Debt in Your 30s
The 30s can be a rough time for debt, particularly in a high cost of living area like Los Angeles. Many people in this age bracket are buying homes, have children to support, are trying to save for retirement, but perhaps haven’t yet reached their full earning potential. The stress was aggravated for today’s 30-somethings. First, the pandemic disrupted income for millions of people, and then high inflation made day-to-day life significantly more expensive for many.
Unfortunately, reliance on credit to get through the rough times can be a vicious circle, with interest and late fees continuing to eat into your budget. If you’re in this situation, it’s important to make a specific, honest assessment of your circumstances and educate yourself about possible solutions as early as possible.
Many people who file for bankruptcy or seek other assistance with their financial difficulties have struggled for a few years before seeking help. That’s a lot of unnecessary stress, and a lot of money wasted making payments that never seem to move you closer to getting out of debt.
At Borowitz & Clark, we’ve helped thousands of people in the Los Angeles area get out of debt. We know how important it is for you to have reliable information as early as possible, so we offer free consultations. Schedule yours now by calling 877-439-9717 or filling out the contact form on this page.