Californians slow borrowing as unpaid debts hit 5-year high

Californians have cooled their borrowings – and skipped more bill payments, two more signs of a stressful economy.

My trusty spreadsheet found these patterns within the Federal Reserve Bank of New York’s third-quarter study of credit files. The data includes the size and payments of consumer debts – including mortgages, credit cards, auto and student loans – in 11 big states and the nation through the September 2025 quarter. These statistics only consider individuals with credit histories — a sizable but not comprehensive segment of the population. Debt levels are tracked as an average per person.

According to this math, Californians had $87,570 in consumer debt per person in the third quarter, a 1.2% increase from the same period a year ago. That’s a cooling from 2.9% growth in the previous 12 months, and it’s below the 3%-a-year expansion pace since 2003.

Yes, fewer debts are a desirable goal. Yet skittish consumers often prune borrowing as financial anxieties increase. For example, the Conference Board’s California consumer confidence index has decreased by 18% over the past year.

These debt-growth numbers are a contrast with borrowing patterns nationwide.

U.S. consumer debt increased by 2.5% in a year to $63,340 per person. That’s a pick up from 1.8% growth in the previous 12 months. Since 2003, consumer debts nationwide have expanded at an average annual rate of 3.2%.

Also, ponder California’s two main economic rivals.

In Texas, the $60,100 debt per person increased by 4.1% in a year – faster than the 1.9% growth in the previous 12 months or the 4% average since 2003.

Florida’s $62,460 marked a 3.5% jump in a year, outpacing the 2.9% rise in the previous 12 months and matching the 3.5% pace since 2003.

Late payments

Californians’ debt-paying troubles rose, too.

In the third quarter, 2.01% of California consumer bills were 90 days or more late. That’s up from 1.9% and the highest level of unpaid debts since the first quarter of 2020, when the pandemic first impacted the economy.

To be fair to California, however, the current bill-paying tardiness is well below the 3.56% average missed payment rate over the last 23 years.

Plus, Californians are paying their bills more effectively than their national peers. The U.S. delinquency rate was 2.98% in the third quarter of 2023 – roughly one-third above the Golden State.

Yes, that U.S. rate was down from 3.02% three months earlier. However, the nation’s late payments in the second quarter were at their highest level since the first quarter of 2020. The U.S. tardiness rate has averaged 3.74% since 2003.

Additionally, consider that late payments in Texas ran 3.85% and 4.1% in Florida in the third quarter – well above California’s rate.

Educational drag

A significant issue is missed student-loan payments, as federal repayment reprieves ended this year.

Nationwide, 14.3% of student debts went unpaid, up from 0.8% a year earlier, and the highest level in a data set that dates to 2000

The N.Y. Fed offered no state-level delinquency rates. But California has a below-average amount of education debts at $4,710 per person, accounting for 5% of overall borrowings statewide – well below national norms.

Nationally, student debts average $5,540, representing 9% of all borrowings. Texas? $5,350 per capita, 9% of debts. Florida? $5,110 per capita, 8% of all borrowings.

Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com