Though the holidays have ended, some consumers may still be feeling the "squeeze" from their purchases. According to new data from Experian the average person still owed more than $4,200 in bankcard debt at the end of 2010.
The data also shows that the average number of bankcards that consumers hold has dropped (nearly 23% since 2007) to 1.97 cards. However, this has contributed to cardholders utilizing, on average, more than 30% of their total available bank card balance, which is a nearly 10% jump since 2007. Carrying high balances impacts utilization rates which play a significant role in how credit scores are calculated. For example, utilization rates account for approximately 23% of a consumer's VantageScore.
"We want consumers to understand that overspending at the holidays or at any other time of year can often have broader implications to their overall fiscal fitness," said Maxine Sweet, vice president of public education at Experian, in a statement. "By carrying over credit card balances and utilizing a significant portion of their available balance, they can potentially negatively affect their credit scores, which can in turn, hurt them when it comes to applying for other types of credit down the line including mortgages and car loans. It's important for consumers to get that debt under control before it has a lasting impact on their credit scores."
Experian looked at cities across the United States and identified the 25 with the most bankcard debt in December 2010. San Antonio, Texas, topped the list with the highest average balance of $5,177.
Key findings include:
- San Antonio, Texas – average bankcard balance: $5,177 (20.9% higher than the national average)– Bankcard balance average has stayed somewhat steady since 2007, despite an 8 percent decrease in the national average.
- Jacksonville, Fla. – average bankcard balance: $5,115 (19.4% higher than the national average)- Jacksonville is also one of the 25 cities with the lowest VantageScore.
- Atlanta, Ga. – average bankcard balance: $4,960 (15.8% higher than the national average) – Despite overall decreases in bankcard balances (decrease of 3.44 percent from 2009) overall utilization of available credit is up (increase of nearly 6 percent from 2007) due to the decrease in the number of bank cards.
- Honolulu, Hawaii – average bankcard balance: $4,939 (15.3% higher than the national average) – Honolulu was one of the few cities in the top 25 that had the highest bankcard balances with an increase in the number of bank cards from 2009 to 2010.
- Dallas-Fort Worth – average bankcard balance: $4,936 (15.2% higher than the national average) – Dallas is one of the cities with the lowest VantageScore in the country.
Sweet added, "A bit of good news is that Americans did reduce their December credit card debt by more than 4 percent when compared to 2009 data."
To help consumers avoid any future holiday debt "hangovers" and take proactive steps to improve their credit and use it wisely, Sweet offers the following tips: