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Places Where People Are Most Likely to Have 5-Figure Credit Card Balances

Places Where People Are Most Likely to Have 5-Figure Credit Card Balances

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About 1 in 6 credit cardholders in America’s biggest cities carry a balance of $10,000 or more, according to a new report from CompareCards, and none of those cities has a higher percentage of these cardholders than Bridgeport, Conn.

CompareCards analyzed a representative sample of Americans to see which of the 100 largest metropolitan statistical areas have credit cardholders with five-figure credit card balances. What we found is that most of the cities with the biggest percentages of people with five-figure credit card debt are clustered along the East Coast and West Coast. Often, it is the wealthiest cities — not the less affluent ones as one might expect — that carry the biggest credit card balances.

Key findings

  • The five-figure credit debt capital of the U.S.: Nearly 23% of credit cardholders in the Bridgeport metropolitan area owe more than $10,000 on their cards. Almost 2% of cardholders in Bridgeport owe more than $50,000, which is also the highest among the nation’s 100 biggest metros. Virginia Beach, Washington, D.C., and New York rounded out the top four, where 20.5%, 19.9% and 19% — respectively — of users have five-figure balances.  
  • The five-figure credit card debt state: Among the top 10 cities with the highest percentages of cardholders with five-figure card debt, three were in California. Los Angeles ranked fifth at 18.6%, San Diego placed seventh at 18.5% and Oxnard came in at ninth at 18.1%. Connecticut was a close runner-up in the state contest, with Bridgeport, Hartford and New Haven all ranking in the top 14.
  • Five-figure card debts rarer in the South: Five of the seven cities among the 100 metros with the lowest percentage of cardholders with five-figure card debt were in the South. Only 12.4% of cardholders in Winston-Salem, N.C., and Indianapolis had more than $10,000 in card balances. Greensboro, N.C., Chattanooga and Knoxville, Tenn., and Jackson, Miss., were among the other cities near the bottom of the list, all having less than 13% of cardholders with five-figure card debts.

Scroll to the bottom of the page to see the complete list of cities.

Is income inequality driving cities to the top of the list?

There’s never just one reason for why certain cities struggle with credit card debt and others handle it better. However, in this survey, one common thread is shared among many of the top cities: high income inequality.  

Of the five metro areas with the highest percentage of cardholders with five-figure card balances, three — Bridgeport, New York and Los Angeles — are among those with the biggest income inequalities in the nation. A 2018 report from the Brookings Institution showed that the Bridgeport metro area had the greatest income inequality of any of the 100 largest U.S. metropolitan areas in 2016, with New York and Los Angeles coming in second and fourth, respectively.

Why does Bridgeport stand out? The metro includes some of the highest income communities in the nation — namely, Greenwich, Conn. — and some of the lowest — namely, the city of Bridgeport itself.

The same report showed that when examining the central cities among the top 100 metros, Washington, D.C., had the second highest income inequality. (D.C. also had the second fastest growing income inequality between 2014 and 2016.)

So why does income inequality matter so much in this report? It’s because, contrary to what many people think, wealthy people often carry credit card debt – sometimes lots of it. They might use credit cards to help with an investment, such as a small business. They might use one to finance a big project, such as a home remodel. They also might just have enough wealth to where any interest they’d have to pay is inconsequential compared to what they have in the bank, so they don’t worry about carrying a balance from time to time.

That wide financial margin of error means that they can end up running up big balances without giving it a second thought. When you have a large number of people like that in the same city or metropolitan area with a large number of people with poor credit who either can’t get credit or just get small lines of credit that prevent one from running up a high balance, you get a situation like we see in Bridgeport: a high percentage of people with high balances.

The bottom line: No matter where you live, focus on paying down that debt

I’ve been in the five-figure credit card debt club while living in a big, expensive city. It’s awful, and it pretty much consumes your life until you escape it. It took me about five years — and a couple of significant pay raises — to finally eliminate that credit card debt. More than 20 years later, the memories of that struggle are still fresh, and I hope never to return to that place.

If you’re still struggling with credit card debt, the worst thing you can do is nothing. Yes, life is crazy expensive in 2019, especially in places like New York, Los Angeles and Washington, D.C., but there are still steps that you can take to help yourself.

  • Make a budget: You can’t make a meaningful plan to tackle your credit card debt if you don’t know how much you’re bringing in and how much you’re spending on a regular basis. Take the time to write down all your recurring bills and then track all your other spending for a couple of weeks. Once you’ve collected the data, compare those expenses to your income. It may not be a pleasant experience, but it will give you a feel for whether you need to focus your efforts on cutting back expenses or increasing income — or perhaps a little of both.
  • Bump up your payments, even just a little: Adding an extra $5 or $10 to your credit card payment doesn’t sound like much, but added up over the life of your debt, it can be significant.
  • Set up autopay: Having debt is stressful, and we all have to-do lists that are 100 miles long. Setting up automatic payments for your credit card means there’s one less thing that you have to do. Plus, it will ensure that you’re never late with a payment again, which helps protect your credit. Just make sure that you pay more than the minimum each time, otherwise you’re asking for trouble.
  • Ask for a lower APR: A recent CompareCards survey showed that 8 in 10 cardholders who asked their card issuer for a lower APR got their request granted, and the average reduction was about six percentage points. That can make a huge difference in your ability to pay off your debt and save you hundreds of dollars and several months in payoff time, depending on how much you owe. And that success rate means that it is not just people with perfect credit who are getting their way. The problem is that far too few people ask. Don’t let fear or nervousness cost you money. Make the call.
  • Get a 0% balance transfer card: It may sound strange to tackle credit card debt by getting yourself yet another credit card but, used wisely, a 0% balance transfer credit card can be a godsend. These cards often offer 12 to 15 months with no interest on transferred balances, which can lead to really significant savings and shortening of payoff time. You will need decent credit to get one, though. It’s also important to understand the fees, maximums and other fine print that comes with the card. Balance transfer cards can be a little confusing, but if you know how to use them, they can save you a ton of money.

Methodology

CompareCards by LendingTree used an anonymized sample of Q1 2019 credit reports from over 1.2 million My LendingTree users with active credit cards (excluding charge cards). Their total balances were then calculated, and the results were aggregated across the 100 most populous metropolitan statistical areas to determine the percent of holders who owe more than $10,000 across all their active cards and the percentage who owe more than $50,000.

My LendingTree is a free credit monitoring service available to the general public, regardless of their debt and credit histories, or whether they’ve pursued loans on a LendingTree platform. My LendingTree has over 9 million users.


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