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Cities Where Credit Card Debt Has Increased and Decreased the Most

Cities Where Credit Card Debt Has Increased and Decreased the Most

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This article was last updated Apr 23, 2018, but some terms and conditions may have changed or are no longer available. For the most accurate and up to date information please consult the terms and conditions found on the issuer website.

The U.S. economy is in a good place, growing at a healthy rate of nearly 3% annually, and the unemployment rate is around 4%. So it’s perhaps surprising that credit card balances are growing in 20 of the 30 largest U.S. metros while declining in nine with one city unchanged.

The changes in credit card balances range from a 9% increase in Miami to a 6% drop in San Francisco.

CompareCards ranked the 30 largest metros in the U.S. by the percentage increases of their respective average credit card balances, versus those during the same period in 2017. Using anonymized data from My LendingTree users:

Miami led the 30 largest metros by far with a 9% annual increase. Pittsburgh was No. 2 at a nearly 6% rise with New York and Chicago both just above 5%.
But even though most cities on this list saw an increase in balances, nine cities dropped. San Francisco, Dallas, and Baltimore led the way with the largest decreases in average credit card balances. Average credit card balances range from $7,276 in Washington, D.C. to $5,114 in Riverside, Calif.

What should we make of the rises and declines? Both can be signs of a healthy economy. Full employment can lead to some households being more comfortable with spending, while others, often with significant savings and home equity, can retire relatively expensive credit card debts. The key metric to consider is credit utilization, which remains nearly unchanged nationwide, and remains at relatively manageable levels.

Balances going up in most, but not all places

Credit balances rose from Sacramento to Boston, but nine of the 30 cities’ average credit card balances saw declines.

Cities with the largest average credit card balance increases:

Miami — credit card balances jump 9%. By a significant margin, Miami’s rise leads the 30 largest U.S. cities. It edges out No. 2 Pittsburgh by three percentage points. Despite the big jump, Miami’s average credit card balance of $5,639 and credit card utilization rate of 30.4% are still lower than most cities on our list.

Pittsburgh — credit card balances increased by 6%. Pittsburgh’s credit card balance of $5,771 was a 6% increase over 2017. According to LendingTree Chief Economist Tendayi Kapfidze, new home purchases may be a big reason. In his recent report, Pittsburgh ranks second in the nation among millennials shopping for a home — homes that often need new appliances or renovations, and costs that new homeowners may charge to their credit cards.

New York — credit cards balances up by 5%. The largest U.S. city is also experiencing one of the largest jumps in credit card balances — its $6,125 average balance is a 5% increase over 2017.

Cities with the largest average credit card balance decreases

30. San Francisco — credit card balances declined 6%. Even though it still has one of the highest average credit card balances in the country, second only to Washington, D.C., San Francisco saw the biggest drops. Even better: San Francisco has the lowest utilization rate among the 30 cities in our study. A booming tech market may be part of the reason, plus strong housing values that can often be tapped for borrowing at a more favorable rate than credit cards.

29. Dallas — credit card balances down 5%. Although it may have a reputation for being an energy town, Dallas’ economy also sports a robust tech sector. And according to the Federal Reserve Bank of Dallas, the metro’s population is growing faster than any other city in the country, buoyed by unemployment rates of 3.6%, a level lower than the current national rate of 4.1%.

28. Baltimore — credit balances drop by 5%. The metro has one of the fastest-growing economies in the Northeast, largely based on higher-paying service jobs in the information technology, defense contracting and financial services industries.

Balances, utilization, and your credit score

The cities in our study with the highest balance increases also generally had the largest jumps in credit utilization.

The average utilization rate across all 30 cities increased from 32.0% in 2017 to 32.2% today. But some cities have even higher rates — San Antonio tops the list at 35.5%. San Francisco has the lowest at 30.1%.

Cities with the greatest balance decreases lowered their credit utilization.

For cities in between, the relationship between balance increase/decreases and credit utilization is more of a mixed bag.

Seeing where you (and your city) stand on balances and credit utilization is important because both are factors in determining your credit score. Balances are straightforward — they’re the amount owed for purchases, as well as any interest and fees.

But credit utilization is equally important. Credit reporting agencies compute your credit utilization percentage (sometimes called the utilization ratio) by dividing the total of all current credit card balances by the total of all credit card limits.

Keeping this figure at manageable levels, along with having relatively low credit cards balances, will improve your credit score over time. Improving your score will also improve offers by lenders for not only credit cards, but other types of loans, including mortgages and auto loans.

If your credit card balance is the same (or more) as your city’s average

Credit card balances of $5,000, $6,000 or more may be OK for a city, but if it’s your balance that’s accruing interest every month, it quickly becomes less of an abstraction. Here are some smart ways you might go about decreasing your own balance:

  • Consider a balance transfer. Consolidating your current balances on a new credit card with a low or 0% introductory APR will give yourself some time — anywhere from six to 18 months — to pay down the principal on your transferred balances. Keep in mind you’ll likely incur a fee of 3% to 5% of the balance you transfer to the new card, but that amount should be less than paying interest on those balances.
  • Set up a structured payment system to pay down your current balances. By setting up a methodical credit card payment system (and following it through), you’ll be able to zero out your credit card balances, and know exactly how many months it will take. The snowball method allows you to pay off smaller credit card balances first, while the avalanche method prioritizes paying down the card balance with the highest APR.
  • Minimize new spending. Balance transfers and paying down credit card balances won’t matter if they’re simply being replaced with balances from new purchases. Managing your spending while paying down balances is equally, if not more, important.

Methodology

CompareCards used a statistically relevant sampling of anonymized My LendingTree user data, comparing the latest three-month period ending January 2018 with the same period ending January 2017. CompareCards also relied on Census Bureau data to determine the greatest changes in credit card balances in the 30 largest metropolitan areas in the U.S.

My LendingTree user credit information is provided by TransUnion.


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