More Credit Card Use – A Bad Sign or a Good Sign for Texas Cities?

When Experian released their year-end report on cities whose residents carry the highest credit card balances, three Texas cities made the top ten list for 2010.

In fact, San Antonio, with an average of $5,177, topped the list at #1. Dallas came in at #5, with an average of $4,935, and Austin made #8, with an average credit card balance of $4,791.

The national average was $4,384, putting San Antonio at 21% above average.

At the same time, El Paso residents reduced their credit card balances by about 14%.

At first glance, one might think that residents in cities with the highest year end balances had the worst cash flow. Perhaps their credit card balances are high because they didn’t have the cash for Christmas gifts and celebrations.

But other analysts have the opposite view, and our research shows they might be right.

That view is that consumers who feel confident in their ability to pay off debt are likely to use credit more freely.

This attitude falls in line with what we learned about the unemployment statistics as the year 2010 came to a close. While the U.S. as a whole was showing about a 10% unemployment rate, many Texans were faring better. Here’s the December 2010 statistics:

San Antonio:   7.3%

Dallas:             7.9%

Austin:                        6.8%

Meanwhile, El Paso stayed with the country as a whole, with unemployment at 10%.

Some Texas consumers who were interviewed said that they use their credit cards freely but pay the bill in full each month. That’s good money management on their part, but could still have a negative impact on their credit scores.

Any time a consumer uses more than 30% of his or her available credit, scores will be negatively affected – and it doesn’t matter if the balance is paid in full each month. Credit card issuers report only the balance at the end of the billing period, and don’t show that the previous month’s balance was paid in full.

Thus, a consumer with a $2,000 credit line who charges and pays off $1,500 in purchases each month is hurting his or her credit scores.

One way to avoid this credit hit is to go on line and pay the monthly balance each month before the monthly statement is generated. This isn’t easy, since credit card issuers aren’t constant with their closing dates. However, it would be a worthwhile practice for consumers who are attempting to build credit scores in anticipation of a home purchase. Either that, or never use more than 30% of available credit at any one time.

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Disclaimer: This information has been compiled and provided by as an informational service to the public. While our goal is to provide information that will help consumers to manage their credit and debt, this information should not be considered legal advice. Such advice must be specific to the various circumstances of each person's situation, and the general information provided on these pages should not be used as a substitute for the advice of competent legal counsel.