2019's Cities with the Highest & Lowest Credit Card Debts
Americans started 2018 with more than $1 trillion in outstanding credit card balances for the first time ever, and we are on pace to begin 2019 in even worse shape.
But not everywhere in the U.S. is in such hot water when it comes to credit card debt. Some cities are better at managing their finances and avoiding overspending than others. In order to determine where Americans have accumulated the most and least sustainable credit card debts, WalletHub drew upon TransUnion credit data to calculate the cost and time required to pay off the median card balances of more than 2,500 U.S. cities. Read on for our findings, additional insight from our panel of experts and a full description of our methodology.
Cities with the Highest & Lowest Credit Card Debts
Ask the Experts
With credit-card debt levels remaining high in 2018, we asked a panel of credit experts to shed light on the unsustainable credit behavior that leads to such negative results and their effects on the economy. Click on the experts’ profiles to read their bios and thoughts on the following key questions:
- What daily behaviors lead people to amass credit-card debt?
- What is the biggest mistake people make when managing credit-card debt?
- How does the growth of credit-card debt affect the economy?
- How will actions taken by the Federal Reserve affect credit card debt in 2019?
- What role, if any, should government play in incentivizing and encouraging people to maintain low debt-to-income ratios (e.g., through tax incentives)?
In order to determine the cities with the most and least sustainable credit card debts, we first looked at the median credit card balances of residents in each of 2,564 U.S. cities as of September 2018, based on TransUnion data. Our analysis includes credit cards that carried a balance and excludes store cards. For our sample, we considered only the city proper in each case, excluding cities in the surrounding metro area.
Using WalletHub’s credit card payoff calculator and the median credit card balance and income of residents in each city, we determined the required number of months to pay off that balance and the resulting finance charges. In order to do so, we made the following two assumptions:
- Individuals earning the national median income ($46,022) would be able to pay 3 percent of their initial credit card balance every month. Using that percentage and the median income in each city, we calculated the average monthly payment required to pay off the city’s median credit card balance.
Note: The median income for each city is based on the 2016 earnings of individuals aged 16 and older who worked full-time year-round, according to the U.S. Census Bureau's American Community Survey. The figure excludes income from sources other than work.
- Consumers would pay an average 15.54 percent interest rate, based on the APR paid by existing cardholders, according to the average interest rate assessed on accounts with finance charges. Using that percentage, we computed the cost of paying off the city’s median credit card balance.
Finally, we ranked the cities based on the calculator’s outputs. A 99th percentile rank corresponds with the city with the least sustainable credit card debt – that is, the city with the longest payoff timeline.
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Sources: Data used to create this ranking were collected from the U.S. Census Bureau, Federal Reserve and TransUnion.