Debt has skyrocketed amid COVID-19. Metro Miami ranks as nation’s second-highest
How are the tens of thousands of Miami-area residents struck by layoffs and business declines getting by?
Lending group LendingTree is out with a report that suggests one big clue: plastic.
The company reported last week that Miami has seen the second-highest growth of non-mortgage debt since the start of the pandemic, at 6.3% Winston Salem, N.C., came in at No. 1, with growth of 6.6%.
Miami also has the largest average balance increase — $2,150 — among the 100 largest U.S. metros, the group said. The average for all metros was $732.
Kali McFadden, LendingTree senior research analyst, said in an email that the average consumer in the Miami metro, which includes Miami-Dade, Broward, and Palm Beach counties, increased balances in every non-mortgage debt category it covers: credit cards, personal loans, student loans and auto.
And while most of the country was using stimulus checks and unemployment supplements to pay down debt while also cutting down on spending, McFadden said, Miami-area residents increased their credit card spending, on average, by $210, or 2.4%, between January and June 2020.
Many locals also bought cars. Auto debt increased about 6% during the same time period.
“While Americans were cutting spending on almost everything, there was a car-buying rush around May, thanks in part to dealer incentives. And we know from past research that drivers in Miami are willing to spend more on their cars than some other parts of the country,” McFadden said.
Previous studies have shown higher levels of — and greater reliance on — debt in South Florida than in other parts of the country. Financial group SmartAsset said in a study released in December that credit card debt per borrower in the tri-county area increased 4.06% in 2019 — the fourth-highest increase among the 47 metros studied. And the average debt per resident stood at nearly $7,000 — about 12.3% of the median household income, or seventh-most in the U.S. Combined, these scores helped make the Miami area the No. 1 region “where residents rely on credit most.”
A separate report by CoreLogic last week showed almost 14% of mortgage borrowers in Miami were at least 30 days behind on payments in May — higher than any other metro.
The latest LendingTree data may not simply be due to a willingness to pop out the plastic. McFadden points out — and Miami Herald reporting has shown — that area residents were less likely to get stimulus and supplement checks to pay down debts than those living in other places.
“We’ve heard reports of delayed unemployment insurance processing in Florida at the start of the crisis and fewer people may have been eligible for the stimulus,” McFadden said.
