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Hawaii credit card debt soars

HONOLULU STAR-ADVERTISER

Hawaii consumers’ average credit card debt jumped 15.2 percent over the previous year to $8,930, ranking the state third nationally for consumers with the highest overall credit debt in July.

Credit debt in the islands averaged $7,751 in July 2009, according to Credit Karma Inc., a California-based credit scoring website. The average credit score in Hawaii was 675, up 4 points over the previous year.

"With the high cost of living and property, Hawaii continues to be one of the leaders in consumer debt," said Ken Lin, chief executive officer of Credit Karma. "With its credit score seven points higher than the rest of the nation, Hawaiians are managing the higher debt a bit better than the rest of the country.

Nationally, consumer credit card debt soared nearly 14 percent to $7,752 since July 2009, with the average credit score of 668, down five points in the same period. The average home mortgage loan in the U.S. was $176,042; the average auto loan was $15,080; and student loan debt totaled $28,301.

Financial counseling services have seen more frugal consumers falling into debt in recent years because of the economy and high cost of living in the islands.

"It used to be a lot of impulsive or spontaneous spending; now we see a lot more people unable to meet their basic living expenses," said Ron Sorrell, senior counselor for Gateway Educational Services, a nonprofit agency whose services include free budget, credit, debt and financial planning counseling.

"So rather than impulsive buying, it’s supplemental buying," he said.

MANAGING MONEY

Hawaii’s debt in July compared with the year-earlier period:

TYPE 2010 2009 CHANGE
Credit card $8,930 $7,751 +15.2%
Mortgage $324,560 $357,696 -9.3%
Auto loans $15,377 $16,656 -7.7%
Student loans $25,723 $24,885 +3.4%

Source: Credit Karma

"They’re using it for groceries and to buy the kids’ school supplies and clothes."

Over the last five years, the agency’s client base also has evolved with more middle-age and older people needing those services, he said.

"We’re seeing some people in their 70s, with a lot more people in what should be their golden years struggling with financial difficulties on limited fixed incomes using credit cards to supplement Social Security just to get by," said Sorrell, whose agency counsels more than 200 consumers a month. "We see professionals that make $200,000 a year, and we see people that are homeless. I see it getting worse."

Arkansas topped the nation in credit card debt with an average of $9,149, followed by Colorado at $9,001, the survey said.

Hawaii ranked among the top three states with the highest mortgage and home equity debt as well, even though the average debt in those categories decreased over the previous year.

The average mortgage debt fell 9.3 percent to $324,560, compared with $357,696 the year earlier; auto loans dropped 7.7 percent to $15,377 from $16,656; while student loans rose 3.4 percent to $25,723 from $24,885.

The report surveyed more than 132,500 Credit Karma users, including 1,600 in Hawaii.

 

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