Americans started 2020 with more than $1 trillion in outstanding credit card balances, but the good news is that we are on pace to begin 2021 in slightly better shape. The first two quarters of 2020 saw the highest credit-card debt paydown in decades, due in large part to the stimulus in response to the COVID-19 pandemic. WalletHub projects we’ll end the year with a small overall reduction in credit-card debt, but there will still be a mountain of debt left in 2021.
Some people are in a better position than others when it comes to credit-card debt. 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.
Main Findings
Cities with the Least Sustainable Credit Card Debt
| Percentile* | City | Median Credit Card Debt | Cost to Pay Off | Payoff Time (Income Adjusted) |
|---|---|---|---|---|
| 99 | Magnolia, TX | $4,134 | $5,861 | 166 months and 18 days |
| 99 | Park City, UT | $5,395 | $7,027 | 155 months and 8 days |
| 99 | Cumming, GA | $3,737 | $3,945 | 130 months and 6 days |
| 99 | Dahlonega, GA | $2,341 | $2,463 | 129 months and 25 days |
| 99 | Jacksonville, NC | $3,209 | $3,140 | 122 months and 3 days |
| 99 | Richmond, TX | $3,385 | $3,287 | 121 months and 9 days |
| 99 | Leesville, LA | $2,917 | $2,461 | 107 months and 17 days |
| 99 | Cottonwood, AZ | $2,572 | $2,065 | 103 months and 1 day |
| 99 | Boerne, TX | $4,836 | $3,840 | 102 months and 2 days |
| 99 | Raeford, NC | $2,933 | $2,185 | 96 months and 17 days |
| 99 | Willis, TX | $2,806 | $2,062 | 95 months and 13 days |
| 99 | Wasilla, AK | $4,500 | $3,290 | 95 months |
| 99 | Ooltewah, TN | $2,874 | $2,046 | 92 months and 25 days |
| 99 | Dumfries, VA | $3,495 | $2,444 | 91 months and 11 days |
| 99 | St. Augustine, FL | $3,031 | $2,069 | 89 months and 15 days |
| 99 | Hialeah, FL | $2,387 | $1,621 | 89 months and 2 days |
| 99 | Buford, GA | $3,229 | $2,183 | 88 months and 22 days |
| 99 | Hinesville, GA | $3,000 | $2,003 | 87 months and 23 days |
| 99 | Miami, FL | $2,715 | $1,784 | 86 months and 16 days |
| 99 | Ewa Beach, HI | $3,281 | $2,145 | 86 months and 4 days |
| 99 | Palmetto, FL | $2,697 | $1,748 | 85 months and 15 days |
| 99 | Green Cove Springs, FL | $2,944 | $1,892 | 84 months and 25 days |
| 99 | Myrtle Beach, SC | $2,734 | $1,753 | 84 months and 20 days |
| 99 | Canton, GA | $3,384 | $2,142 | 83 months and 22 days |
| 99 | Palmer, AK | $4,021 | $2,509 | 82 months and 20 days |
| 99 | Cocoa, FL | $2,640 | $1,638 | 82 months and 8 days |
| 99 | Blacklick Estates, OH | $3,347 | $2,074 | 82 months and 4 days |
| 99 | Copperas Cove, TX | $3,060 | $1,854 | 80 months and 17 days |
| 99 | Live Oak, FL | $2,205 | $1,334 | 80 months and 13 days |
| 99 | Benton Harbor, MI | $2,149 | $1,294 | 80 months and 2 days |
*99th Percentile = Least Sustainable Credit Card Debt
Ask the Experts
With credit-card debt levels remaining high in 2020 but decreasing, 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 2021?
- What are the most effective ways to avoid increasing one's debt load as the pandemic progresses?
- What role, if any, should government play in incentivizing and encouraging people to maintain low debt-to-income ratios (e.g., through tax incentives)?
Ask the Experts
- Todd Chipman
Finance, Economics, and Personal Finance Instructor – Nebraska Wesleyan University
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- Brian Starr
Ph.D. – Assistant Professor of Economics and Finance – Lubbock Christian University
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- Andrew Ching
Professor of Business and Economics – The Johns Hopkins Carey Business School
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- Samique March-Dallas
Ph.D. – Associate Professor|CFO Faculty Advisor|Research Cafe Coordinator| Bloomberg Finance Lab Director; Department of Accounting and Finance| School of Business and Industry – Florida A&M University
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- Kent S. Belasco
Ph.D., CPA – Director, Commercial Banking Program and Assistant Professor of Practice – Marquette University
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- Ranajoy Ray-Chaudhuri
Ph.D. – Assistant Professor of Economics & Finance, Department of Accounting, Business, Economics & Finance; Director, Muhlenberg Scholars Honors Program – Muhlenberg College
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Methodology
In order to determine the cities with the least and most 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 2020, 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 would be able to pay 3 percent of the national median credit card debt. We then took the ratio between that resulting monthly payment and the national median income and applied it to each city’s specific income.
Note: The median income for each city is based on the 2019 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 16.43 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.
Sources: Data used to create this ranking were collected from the U.S. Census Bureau, Federal Reserve and TransUnion.