Pennsylvanians are more financially stable than average Americans. They have less credit card debt, lower mortgages and smaller amounts of debt as a whole. This helps them keep bankruptcy filings at rates lower than the rest of the country, and it enables them to pay bills on time. Such a positive financial environment even led financial analysts to rank the state eighth in credit health.
But despite trends indicating fiscal responsibility, Pennsylvanians have several financial pitfalls. They have significantly more student loan debt than average, perhaps a result of a higher percentage of recent college graduates. They also have below-average credit scores.
Additionally, state legislation falls short. It offers only the essential protections and serves to reinforce national laws rather than add to consumer protections. Consequently, Pennsylvania has higher rates of consumer fraud and identity theft.
Consumer Debt in Pennsylvania
As of May 2012, the average Pennsylvanian with a credit report had only $39,100 of debt — 18 percent lower than the national average of $47,500. Compared with the country as a whole, Pennsylvania residents carry less of every type of debt except student loan debt. Mortgages and credit card debts are below average but by no means negligible.
Credit Card Debt
Pennsylvanians have slightly less credit card debt than most Americans, with Pennsylvania residents carrying a typical balance of $2,730 and Americans generally carrying $2,820.
This figure is a far cry from that of several years ago. In 1999, the average Pennsylvania consumer had only $2,230 in credit card debt. This number increased by 50 percent in less than a decade, peaking at $3,350 in 2008.
Since then, the debt level has decreased, as Pennsylvania residents reduced their credit card debt by 19 percent in less than four years.
Pennsylvanians have mortgage debts averaging $25,400. This is nearly $9,000 below average.
This could partially be a result of previously high foreclosure rates in the state. In late 2003, 0.85 percent of prime mortgages — those granted to ideal borrowers — were in foreclosure. This was the ninth-highest in the country. Subprime mortgages were even worse, with 12 percent in foreclosure at the time. That was the fourth-highest rate, behind Ohio, Indiana and Kentucky.
Foreclosing on so many delinquent mortgages naturally means fewer are left. Because the average mortgage debt takes into account everyone with a credit report, it includes individuals who don’t own homes and don’t have mortgages, including those who lost their homes to foreclosure over the last few years. This brings down the average and can create an illusion that residents are paying down their mortgages.
Student Loan Debt
Student loan debt held by Pennsylvanians is significantly higher than the national average. While the typical American currently has $3,750 in student loans, Pennsylvanians have an average of $4,460, nearly 20 percent more.
This may be attributed in part to an uptick in Pennsylvanians with college degrees. While 42.8 percent of Pennsylvanians aged 25 to 34 have college degrees, only 37.8 percent of Americans the same age hold degrees.
Bankruptcy in Pennsylvania steadily rose in the early 2000s, reaching an all-time high of 77,587 personal bankruptcies in 2005. In that single year, one bankruptcy was filed for every 128 adults in the state.
The following year, the number of bankruptcies in Pennsylvania plummeted to 23,190. This was only 30 percent of 2005’s number. The drop was a direct result of the vast number of bankruptcies of 2005 and the previous few years. There simply weren’t many people left to declare bankruptcy.
Still, Pennsylvania has a lower rate of bankruptcy than the rest of the country. In the first three months of 2012, 0.09 percent of Pennsylvanians filed for bankruptcy, or 9 people out of every 10,000. In the same time period, 0.15 percent of all Americans declared bankruptcy, or 15 out of every 10,000.
Pennsylvania State Laws on Consumer Debt
Pennsylvania has very few provisions protecting consumer rights when it comes to credit, debt and related transactions. Its state laws do very little beyond reinforcing national consumer debt laws.
Pennsylvania Unfair Trade Practices and Consumer Protection Law
The state’s consumer protections are outlined in the Pennsylvania Unfair Trade Practices and Consumer Protection Law (UTPCPL), an all-encompassing piece of state legislation.
The law’s main provision states that a seller may not engage in “unfair methods of competition” or “unfair or deceptive acts or practices.” This is Pennsylvania’s version of the Federal Trade Commission Act. It prohibits an array of actions such as misrepresenting goods, participating in scams or omitting key facts about a product.
The UTPCPL also states that if a sale is made at the buyer’s residence or over the phone, the buyer has three business days to contact the seller in writing and void the sale.
Statute of Limitations
Pennsylvania has a statute of limitations of six years for typical debts. If it’s been more than six years since a credit card debt or contractual loan obligation became due, the creditor can no longer take collection actions for that debt. This is a standard statute of limitations and is on par with most other states.
Other debts in the state have shorter time frames. Promissory notes and oral contracts have a statute of limitations of only four years.
Consumer Fraud and Identity Theft
Pennsylvania ranks high for both identity theft and consumer fraud. Fraud is an umbrella category that includes identity theft in addition to other fraudulent actions such as misleading sales and deceptive offers.
In 2010, the state’s residents filed nearly 300 fraud complaints and 71 identity theft complaints per 100,000 residents. This ranked it 19th in the nation for consumer fraud and 14th for identity theft.
Identity thefts are up significantly; the rate in 2010 was 12 percent higher than it was only five years earlier. In 2005, there were about 64 thefts per 100,000 people, and the state ranked 24th.
The state’s metropolitan areas also ranked high for consumer fraud and identity theft, based on a study that ranked 384 metropolitan areas. Here are the Pennsylvania cities that ranked in the top 50 for fraud or identity theft in 2010:
|City||Fraud Complaints per 100,000 Residents||Rank|
|City||Identity Theft Complaints per 100,000 residents||Rank|
Credit Scores in Pennsylvania
Pennsylvania consumers have an average credit score of 655, just below the national average of 661. This is based on the FICO scoring model, which ranges from the poorest score of 300 to the best score of 850. The state average follows the national trend and has increased slowly in recent years.
A number of factors contribute to this score.
In addition to keeping debt low, Pennsylvanians are responsible when it comes to paying bills on time. Dollar for dollar, 7 percent of debt nationwide is 90 or more days overdue. Pennsylvania, however, has a low delinquency rate of just 4.9 percent.
These numbers are similar for mortgage delinquencies. About 6.7 percent of mortgages nationwide are delinquent, compared to 4.1 percent in Pennsylvania.
Despite low delinquency rates and lower-than-average overall debt helping to boost credit scores, Pennsylvanians’ scores remain just below average. Factors like short credit histories and high rates of bankruptcy may be pulling the state’s overall score down.