Texas' Debt Problem Is Getting Worse—Here's What's Driving It

Despite Texas’ reputation for affordability, its major cities lead the nation in non-mortgage debt, with Austin residents owing an average of $45,920, according to a LendingTree study.

The study, which examined credit reports of 210,000 users from April through June 2024, found San Antonio and Houston following closely behind Austin, with average non-mortgage debts of $44,812 and $44,640, respectively. 

The national average among the 50 largest metropolitan areas is $37,827.

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Auto loans drive much of the debt burden. San Antonio leads with an average auto loan debt of $18,303, followed by Austin at $17,144.

“You generally need a vehicle to get around the biggest cities in Texas. That puts many Texans in a tough position, especially with vehicle prices and interest rates at today’s sky-high levels,” Matt Schulz, LendingTree’s chief credit analyst, told Newsweek.

While Texas maintains relatively affordable housing compared with coastal states, residents are facing high property tax burdens. WalletHub’s 2024 property tax report ranks Texas seventh-highest nationally, with average annual property taxes of $3,872.

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Low wages compound the debt problem. According to Oxfam, nearly one-third of Texas workers—4.5 million people—earn less than $17 per hour. Texas remains among 20 states still using the federal minimum wage of $7.25.

“While Texas has been booming in recent years, salaries are still generally lower than those found in the biggest American cities, especially those along the coasts,” Schulz told Newsweek. He noted San Antonio’s particularly challenging situation as one of America’s lowest-income major cities.

Lower credit scores further strain Texas residents’ finances. “That means fewer borrowing options, but it also means that if they’re able to get a loan, they’re likely to face higher interest rates and other costs,” Schulz added.

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Dallas ranks sixth nationally in non-mortgage debt at $43,901, following Miami and Atlanta but still exceeding the national average. Monthly mortgage payments in Texas average $2,182, ranking 16th nationally, according to LendingTree.

Despite the debt challenges, Realtor.com projects Texas will become America’s most populous state by 2045, driven by the same factors that sparked recent growth—job opportunities, affordable housing compared to coastal markets, and favorable weather conditions. 

However, the benefits appear to favor out-of-state transplants more than local residents due to the state’s wage structure.

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