Florida Ranks 4th Worst for Debt Repayment

Inside Subprime: August 13, 2019

By Lindsay Frankel

A recent report published by a financial planning company revealed which states have the most unpaid debt. After Mississippi, New Mexico, and Louisiana, Florida ranks fourth in the national ranking. The household debt per capita in Florida is $45,300.

The study used statistics from several government agencies to rank the states, taking into account auto loans, student loans, mortgages, and credit cards. Floridians fared the worst on their student loans, with 13.7 percent of student loans in default, even higher than the national average of <11.4 percent. The delinquency rates for credit cards, auto loans, and mortgages in Florida were 9.7 percent, 5.3 percent, and 1.6 percent, respectively.

Between Florida’s affordable housing crisis and rising healthcare costs, it’s no surprise that Floridians are struggling to make ends meet. Florida’s median hourly wage is just $16.62, and 14 percent of residents are living in poverty.

The report also named “local lending and borrowing practices” as one factor that impacts the financial health of residents. While Florida payday loan debt wasn’t analyzed in the study, payday lenders are known to prey on low-income Floridians, charging exorbitantly high interest rates that make it difficult for residents to pay their other bills.

In just a year between 2016 and 2017, Floridians borrowed 7.7 million payday loans, and almost a third of borrowers took out 12 loans or more in that time frame. That’s because the high interest rates and short terms associated with payday loans lead borrowers to take out repeated loans when they can’t pay off the first one on time. A Florida payday loan carries an average APR of 304 percent, according to the most recent data from Pew Charitable Trusts.

The study found a significant correlation between delinquent payments and indicators of financial health. “Across the U.S., strong payment histories are correlated with higher credit scores, easier access to capital and lower poverty rates. Conversely, loan delinquencies are associated with lower credit scores, limited access to capital and higher rates of poverty. This data further underscores the importance of managing debt and building strong credit from an early age,” the report reads.

Despite the importance of building financial health early on, young people struggled the most with defaulting on their payments, the study found. Adults under the age of 29 were more likely to miss payments on their auto loans or credit cards.

The report recommends that people who are too deep in debt seek help from a nonprofit organization such as the National Foundation for Credit Counseling.

The 15 worst states for unpaid debt were as follows:

  1. Mississippi
  2. New Mexico
  3. Louisiana
  4. Florida
  5. Nevada
  6. Oklahoma
  7. West Virginia
  8. Alabama >
  9. Delaware
  10. Arkansas
  11. Kentucky
  12. South Carolina
  13. Texas
  14. New York
  15. Georgia

Learn more about payday loans, scams, and cash advances by checking out our city and state financial guides, including Illinois, Chicago, Ohio, Texas, and more.