As with most states across the country, California was heavily affected by the pandemic. Though the state is seeing an uptick in job openings in various sectors, California ranked 26th in average credit card debt by state with an average debt of $5,120 held in 2020. But by 2021, California ranked in at 1st place when it came to credit card debt increasing in Q2 2021. And with an ever-increasing cost of living, finding ways to decrease debt has become more and more difficult.
“Rising rent and housing prices are crippling California residents who are already struggling to meet their credit card payments,” says Gary Herman, President of Consolidated Credit. He continues, “And with the high unemployment rate in the state it is becoming even more difficult for people to decrease or even maintain their level of debt.”
Consolidated Credit Helps California Residents Reduce Their Total Credit Card Payments by Up to 50%
Consumer Debt in California
This chart shows a breakdown of average consumer debt in California based on the latest report of Household Debt report from the Federal Reserve.
In 2020, 69,432 Californians filed for bankruptcy.
Income and employment in California
California is not a right-to-work state. This means that union dues are mandatory for employment, which remains the case even when the employee is not part of a union.
With one of the highest rates of unemployment in the country, California’s unemployment rate stands at 7.6 percent—down 8.4 percentage points from peak unemployment of 16 percent in April 2020. Only Nevada has higher unemployment with a 7.7 percent unemployment rate.
However, California’s leisure and hospitality sectors added 558,500 jobs between April and July of 2021 making it one of the fastest-growing sectors of the California economy. The state’s most projected job openings range from registered nurses to heavy and tractor-trailer truck drivers as well as retail salespersons and waiters and waitresses.
Banking and taxes in California
California’s income tax rates range between 1-13.3% and a state sales tax of 7.25%. California also allows local governments to collect a local sales tax of up to 3.5%. Therefore, when combined with the state sales tax, California’s highest sales tax rate is 10.75% in cities like Hayward, San Leandro, Alameda, Union City, and Neward. The average sales tax runs to about 8.492%.
The average Californian is more likely to bank than the average American. The percentage of residents without a checking or savings account stands at 5.6% currently.
California Housing Market
California has a per capita (average per person) income of $71,480, which is significantly higher than the national average of $59,729. They also have a median household income of $75,235. On top of this, the minimum wage in California is $13 per hour compared to the federal minimum wage of $7.25.
While the extremes of California’s housing crisis have been concentrated in the Bay Area and in Los Angeles, in actuality the challenges are statewide. Cities like Sacramento and Fresno have been experiencing increases in average rental prices yearly.
Take, for example, the median price of an existing single-family house in 2021, which is expected to reach up to $795,600. That is a 20.7% increase from the 2020 median price; a $136,000 increase from last year.
California does offer a homestead exemption, which can range from $300,000 to $600,000.
California has an emergency rental assistance program for renters facing difficulties making rental payments. Additionally, California offers assistance with mortgage relief.
Talk to a HUD-certified housing counselor to get help with the housing challenges you’re facing
Retirement in California
California has adopted ancient Greek polymath Archimedes’s exclamative point, “Eureka!” as its motto. Arguably that exclamation comes post-realization that the average Californian must move in order to live comfortably after retiring. The average Californian has about $428,437 saved for their retirement when in reality one needs to have around $1.5 million saved up to retire comfortably in the state.
California has seen an increase of nearly 15% in the state’s population. On top of that, the 65 and older population of California grew by 3% in 2019 alone. It is expected that most homeowners will sell, downsize and relocate to a home of equal or lesser value. Historically, retirees have traded in California for states that are more relaxed and have a lower cost of living, such as Florida, Texas or Arizona. Furthermore, about 22% of retirees rely on Social Security for about 90% of their income.
Average California insurance premiums
With the average auto insurance premiums of $1,966 per year, as well as California technically not being a no-fault state, driving in California can be very expensive. Drives in California still retain their right to sue for any additional damages.
On the one hand, homeowner’s insurance rates are somewhat more affordable at a rate of $1,031 annually. On the other hand, the average health insurance premium comes up to $7,056, which is higher than the national average.
Helpful resources for Californians facing hardship
Food Insecurity
Region: Los Angeles & Long Beach Food Bank: Los Angeles Regional Food Bank Address: 1734 E. 41st Street, Los Angeles, CA 90058 Phone Number: 323 234-3030
Region: San Francisco Food Bank:SF-Marin Food Bank Address: 900 Pennsylvania Avenue, San Francisco, CA 94107 Phone Number: 415-282-1900
Region: San Diego Food Bank:Feeding San Diego Address: 9477 Waples Street, Suite 100, San Diego, CA 92121 Phone Number: 858 453-3663
Region: Sacremento Food Bank:Placer Food Bank Address: 8284 Industrial Ave, Roseville, CA 95678 Phone Number: 916 783-0481
Region: Bakersfield Food Bank:Central California Food Bank Address: 4010 E. Amendola Ave., Fresno, CA 93725 Phone Number: 559 237-3663
Region: Oakland Food Bank:Alameda County Community Food Bank Address: 7900 Edgewater Drive, Oakland, CA 94621 Phone Number: 510 635-3663
Veterans
As of 2019, California was home to 1,574,531 Veterans. These resources are available to help Veterans that are facing unemployment, homelessness, and other hardships.
How Consolidated Credit helps California residents find debt relief
In 2021, Consolidated Credit provided free credit counseling to 18,004 California residents. Of those, 882 went on to consolidate their debt with our help through a debt management program (the average amount of debt enrolled was $10,619). The others received a free debt analysis and complementary budget evaluation, and they were directed to the right solution for their situation to get out of debt as quickly as possible.
We’d also like to congratulate the 1071 California residents that got debt-free last year with the help of Consolidated Credit!
Relief options to consider if you’re in debt in California
If you have good credit and need to pay off credit card debt and other non-secured debts, a debt consolidation loan is an excellent option for you. By having good credit, you’ll get a low-interest rate for a loan that refinances all of your debt with one monthly payment. This will help you get out of debt faster, and you may wind up paying less each month. This is an excellent solution for California State residents with high debt and a good credit score.
Californian homeowners may qualify for a home equity loan or a home equity loan of credit, also called a (HELOC). These types of loans use the equity in your home. Due to rapid home value increases, many residents have equity in their homes. The loan allows you to borrow against the equity in your home and pay off credit cards and other debt. This is not a step to take lightly because you could lose your home in foreclosure if you can’t make the payments. If you are considering borrowing against your home, call 1-800-435-2261 to speak with a HUD-certified housing counselor to make sure this is a safe option for you.
Consolidated Credit helps California residents with counseling programs that identify the best way to get out of debt after considering their situations. California residents can get a confidential debt and budget evaluation from a certified credit counselor. Afterward, the counselor will go over the available options and which course of action best meets a person’s needs and goals.
In California, as in other states, it’s best to avoid bankruptcy. If you can afford to repay all that you owe to avoid credit damage but can’t do it on your own, a debt management program can help. You enroll through a credit counseling agency. The agency will work with your creditors to reduce or eliminate interest and work out an affordable repayment schedule. Qualifying Californians can get out of debt in 36-60 payments, on average.
Another option for California residents is debt settlement. With debt settlement, you settle your debt independently or with the help of a debt settlement company. In this program, you agree to pay your creditors a portion of what is owed. This will damage your credit rating because you are not paying on the terms you first agreed to. Missed payments, which are often caused by this type of program, will hurt your credit rating for seven years. Even with those negatives, this can be an excellent program for California residents with overwhelming debt. It can help you avoid bankruptcy.
If you’re curious how we can help you, below, you will find a few case studies from clients that we’ve helped in California. If you’re facing challenges with debt, call us at (844) 276-1544 to receive a free debt and budget evaluation from a certified credit counselor.
Don’t let high interest rate credit card debt hold you back! Talk to a certified credit counselor to understand your options for debt relief
Case Study
Denise
from
Valencia, CA
“I consolidated my credit cards so fast and efficiently with this program. Consolidated Credit made it all so easy!
”
Where
she
started:
Total unsecured debt: $17,196.00
Estimated interest charges: $9,052.90
Time to payoff: 10 years, 4 months
Total monthly payments: $687.84
After DMP enrollment:
Average negotiated interest rate: 8.56%
Total interest charges: $2,557.55
Time to payoff: 3 years, 8 months
Total monthly payment: $451.00
Time Saved
6 years, 8 months
Monthly Savings
$236.84
Interest Saved
$6.495.35
Case Study
Eric
from
Whitier, CA
“I’m very satisfied with the service. The payments are always made on time and the APR reduced significantly!
”
Where
he
started:
Total unsecured debt: $10,525.00
Estimated interest charges: $6,188.51
Time to payoff: 13 years, 8 months
Total monthly payments: $421.00
After DMP enrollment:
Average negotiated interest rate: 2.00%
Total interest charges: $542.18
Time to payoff: 5 years
Total monthly payment: $185.00
Time Saved
8 years, 8 months
Monthly Savings
$236.00
Interest Saved
$5,646.33
Case Study
Maria
from
San Mateo, CA
“I’m very happy with these services – it’s quick and easy to setup. The counselors are very professional and make it comfortable to transition into this program.
”
Where
she
started:
Total unsecured debt: $74,451.00
Estimated interest charges: $43,657.83
Time to payoff: 18 years, 8 months
Total monthly payments: $2,978.04
After DMP enrollment:
Average negotiated interest rate: 7.96%
Total interest charges: $18,090.40
Time to payoff: 5 years
Total monthly payment: $1,539.00
Time Saved
13 years, 8 months
Monthly Savings
$1,439.04
Interest Saved
$25,567.43
Ready to see if you qualify for debt relief through Consolidated Credit? Talk to a certified credit counselor now for a free debt and budget evaluation.
This content is based on accredited financial data gathered from reputable sources, such as government websites, credit bureaus, and nonprofit organizations. All articles are written by certified credit counselors and fact checked by certified financial experts.
Our team strives to provide educational content that fully informs readers of all their options as they relate to debt, credit and personal finance. Our goal is to give readers the information they need to make informed financial decisions on their own.
This article contains references that provide sources for the financial data we used. The numbers in brackets [1,2,3] are clickable links to each data source or study referenced.
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Consolidated Credit has helped over 10.2 million people find relief from debt. Now we’re here to help you.
Your counselor will help you complete and review your debt and budget analysis, then they’ll discuss the best options for getting you out of debt. If a debt management program is right for you, your counselor can also help you enroll as soon as you’re ready.
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