WalletHub Ranks Cities with Least Sustainable Credit Card Debt
With U.S. credit card debt totaling more than $1 trillion and the 2019 holiday shopping season likely to move that number even higher, it’s a sad reality that many Americans will spend months or years paying off their debts. However consumers in some cities may have it even worse than others. A new study by the personal finance site WalletHub looked specifically at how long it would take those in certain cities to pay off their balances in a bid to determine the places with the least sustainable credit card debt.
It’s always intriguing to look at WalletHub’s methodology for such studies and this report is no exception. First the site ranked a total of 2,564 cities from around the United States — specifically the city itself and not the metro area. For each, WalletHub looked at the median credit card balances using TransUnion data. Notably these figures only include cards that had balances and excluded store credit cards.
As for the calculation details, WalletHub first assumed that those earning the national median income would be able to pay 3% of the national median credit card debt. With that, the site applied the resulting ratio of monthly payment to national median income to each city’s specific median income. Finally, since credit card debt incurs interest, the study pegged the APR at 16.97%.
When all of those figures are considered, Jacksonville, North Carolina was found to be the city with the least sustainable credit card debt. With a median balance of $3,435, WalletHub estimates it would take 138 months and 17 days to pay it off in full. In turn consumers would end up spending an extra $4,048 in interest. Other cities that also landed in the 99th percentile include Magnolia, Texas; Park City, Utah; Lake Placid, Florida; and Buford, Georgia.
On the other end of the scale, Silicon Valley was well-represented in the first percentile. All the way the bottom of the list is Apple’s hometown of Cupertino, California where a $2,408 card balance could be paid off in 12 months and 8 days. Many other cities in the Golden State took up most of the bottom 10 slots. One outlier was Scarsdale, New York. There the median card balance was a much higher $5,303 but WalletHub estimates that residents could pay that off in 17 months and 2 days.
Some other interesting tidbits from the study include the fact that Clarkston, Georgia was found to have the lowest median credit card debt in the country, just barely topping a grand ($1,003) — good enough to land them in the fourth percentile. Meanwhile Darien, Connecticut had a median figure more than eight times that: $8,051.
If nothing else, this latest report is an important reminder about the dangers of credit card debt. Although cards can have some legitimate benefits when used responsibly, carrying a balance on cards can result in hundreds or thousands in interest payments over the course of years. As for those who are already finding themselves buried in credit card debt, perhaps some changes in 2020 can help them begin to dig their way out.