Consumer Debt in Texas

    Even with the oil industry dragging in 2016, Texas economy packs a strong punch. Residents owe far less on mortgages and student loans than the national average. However, there are still problems with credit card debt and credit scores that are far below the national average.

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    Where Texas Debt Ranks

    The Texas economy generates $1.65-trillion — second only to California in terms of revenue-producing economies in the United States. It showed the second-fastest rate of job gains in 2015, while 121 of the 1,000 largest public and private companies are in the state, including giants such as AT&T, ExxonMobil and Dell.

    The oil industry has taken a hit — once trading at more than $100 a barrel in 2014, but down to $46 in mid-2016 — but the state’s economy has become much more diversified with expansion into healthcare and technology.

    Residents owe far less on mortgages and student loans than the national average. But there are lingering problems with credit card debt and credit scores that surpass the national average.

    Where Texas Credit Scores Ranks

    Texans have among the lowest credit scores in the country, a result of falling behind on bills and making late payments. The state also has one of the highest rates of identity theft in the country, although this rate has decreased in recent years.

    Consumer debt problems in Texas could partially be the rest of a lack of statewide consumer protection laws. While some states use federal laws as building blocks for more stringent state laws, Texas does little to expand upon national protections.

    Credit Card Debt

    Texans have a combination of different types of debts, but credit card debt is among the most detrimental. It is a problem that could be addressed by a non-profit credit counseling agency, where more could be learned about budgeting and money management.

    According to Experian study from 2015, Texans had an average credit card debt of $5,960, ranking 38th nationally, and well above the national average of $5,700. It was the same figure from a study three years earlier, but the state was ranked 33rd nationally then, suggesting that it’s more difficult to pay down the debt in Texas than other regions with higher median incomes.

    There are discrepancies in the statistics from various credit-card debt studies, but they agree that Texas is lagging behind the national average.

    According to a 2015 study by, three Texas metropolitan areas are among the five worst areas for credit-card debt.

    San Antonio was No. 1, possibly because of the area’s heavy presence of members of the military, who are more likely to carry higher credit card debt than other portions of the population. According to, San Antonio had an average credit-card debt of $4,879 and a median income of $27,491. Assuming a monthly payoff of 15%, it would take San Antonio resident 16 months to erase the total debt.

    Dallas-Fort Worth was ranked No. 2 in the study and Houston was No. 5.

    Consumer Debt

    In addition to credit-card debt, Texans and other Americans struggle with student loans, mortgages and other debts.

    In 2015, Texans had an average student loan debt of $26,250, which was well below the national average of $28,950. Still, given the fact that the student loan debt increased by 61% in the state from 2004-12 — while inflation increased by 22% — it’s a sizable issue.

    Texans also have mortgages averaging $22,500, as well as auto loans and personal loans. The average Texan carried $38,000 in debts in 2015, well off the national average of $46,170.

    Non-profit credit counseling agencies can provide education and relief, while teaching consumers about debt consolidation or enrolling them in a debt-management program.

    Meanwhile, Texas bankruptcy rates continue to decline. On a per-capita basis, Texas had the nation’s 46th-highest total of 1.24 bankruptcies per 1,000 residents in 2014, a drop of 13% from the previous year. From 2005 to 2011, Texas bankruptcies were cut in half.

    Credit Scores

    Despite having lower debt amounts overall, Texans have worse credit histories than most Americans. Experts state that consistently late loan payments are responsible for the state’s credit scores.

    Texans have an average FICO credit score of 646.9, ranked 45th nationally and far lower than the national average of 695. The FICO model, which is used by all three nationwide credit bureaus, assigns scores on a scale of 300 (poor) to 850 (excellent).

    Texas State Laws on Consumer Debt:

    The Texas legislature has enacted a handful of laws that work in conjunction with federal laws to increase financial protection for its citizens. These laws specifically limit collection actions and credit card penalties.

    Texas Debt Collection Act

    The Texas Debt Collection Act is the state’s version of the federal Fair Debt Collection Practices Act (FDCPA). Both aim to protect consumers against unfair collection practices. The Texas act covers the same areas as the FDCPA; they both prohibit debt collectors from using fraudulent, abusive or misleading tactics during attempts to collect debts.

    However, the federal law applies only to debt collectors working for designated debt collection agencies and professional lawyers hired for debt collection purposes. The Texas law reaches a broader scope. It applies to anyone attempting to collect a consumer debt, regardless of their affiliations.

    Statute of Limitations

    Texas’ four-year statute of limitations on debts works alongside the Texas Debt Collection Act. The limited time period means that debt collectors cannot sue individuals in an attempt to collect debts that are more than four years past due.

    Credit Card Laws

    Texas law limits credit card interest rates to 18 percent, a rate that is periodically re-evaluated. However, this only applies if the card issuer is chartered in Texas, which is rare.

    Other types of loans and debts can exceed an 18-percent rate. For example, commercial loans of more than $250,000 can have interest rates up to 28 percent.

    Texas law also prohibits businesses from charging customers extra for using credit cards. However, businesses are allowed to give discounts to consumers who pay with cash.

    Identity Theft in Texas

    In 2015, Texas had the nation’s 12th-highest total of identity theft, averaging 95.9 cases per 1000,000 residents. It is down from 10 years earlier, where there were 116 thefts per 100,000 residents.

    One of the largest identity thefts in history occurred in late 2004. ChoicePoint, Inc., a Georgia-based company that kept consumer financial data records, suffered a security breach that compromised the records of more than 163,000 individuals nationwide. Texans accounted for more than 11,000 of the affected individuals, more than any other state besides California. The breach led to at least 800 identity theft cases nationwide.

    Bill Fay


    Bill Fay

    Staff Writer

    Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it seven years ago, helping birth into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering college and professional sports, which are the fantasy worlds of finance. His work has been published by the Associated Press, New York Times, Washington Post, Chicago Tribune, Sports Illustrated and Sporting News, among others. His interest in sports has waned some, but his interest in never reaching for his wallet is as passionate as ever. Bill can be reached at

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