Worst Cities for Credit Card Debt

The Longest Average Payback Periods for Credit Card Debt

Worst Cities for Credit Card Debt
August 26, 2015

Everything is bigger in Texas — including the average time it takes to pay off a credit card debt. That is among the findings from a recent study by CreditCards.com. They compiled information from the 25 largest metropolitan areas and found that three Texas cities ranked among the top five for the longest time to pay off a credit card debt.

To identify the metro areas where credit card debts were increasing (and therefore where people were paying more in interest charges), CreditCards.com gathered data from Experian on average credit card balances and from the Census Bureau for median earnings in all the metro areas to be studied. The payoff time was calculated assuming that 15% of the median income was devoted to pay off credit card debt, as 15% is a benchmark often used by credit counselors to determine a reasonable ability to repay a debt.

In terms of the longest average payback time, San Antonio topped the list with a sixteen-month payback period, Dallas-Fort Worth came in tied for second with a fourteen-month payback period, and Houston was fifth with a thirteen-month payback period. The other cities in the top five were Miami-Fort Lauderdale and Atlanta, both with fourteen-month payback periods.

On the other end of the spectrum, the City (or Cities) by the Bay had the shortest average payback period of the metro areas in the study. The San Francisco-Oakland-San Jose area had a nine-month payback period, with Boston and Washington D.C. tied for second with a ten-month payback period.

The differential between the highest and lowest payback periods can be significant with respect to interest payments. In this case, residents of the Bay Area had average card balances of $4,393, a bit below the average debt load, but the median earnings were higher at $44,491. The interest costs accrued during a nine-month payback period was $227. Contrast that with San Antonio residents, who had a higher balance of $4,880 but much lower median earnings at $27,491. The resulting sixteen-month payback period racked up $448 in interest costs — almost two times that of Bay Area residents.

Although it seems obvious, the study underscores how important income is in dealing with debt burdens. Aggregate debt burdens do not necessarily correlate to the jobless rate in an area, as the Texas economy is still relatively robust (even with plunging oil prices). Nor is the issue simply one of cost-of-living, since the Bay Area has one of the highest costs of living in the U.S. It is the ratio of average income to the average cost of living, probably overlaid with individual circumstances that increase the debt loads in certain areas.

For example, the San Antonio area has a large military presence. Military families have a tendency to take on greater levels of debt compared to the civilian population, with generally fewer assets and 7.1% greater unsecured debt than the U.S. average, according to the National Foundation for Credit Counseling (NFCC).

You can see all of the listings for yourself here. If you live in one of these metro areas, see how your area stacks up nationally, and how your family compares to the average within the area.

While this is useful information, it does not change the fundamental facts of staying out of excessive credit card debt. Whenever possible, do not charge any more than you can pay off at the end of the month. Follow that philosophy, and you will have no struggles with credit regardless of where you live.

If you want to settle outstanding debts for less than what you owe, try our debt settlement tool.

Photo ©iStock.com/DNY59

  Conversation   |   29 Comments

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Elaine | 08.26.15 @ 14:27
Very interesting article. My city isn't on the list but I would imagine that the average credit card debt would be pretty high. They are all the time interviewing people on TV and they are talking about paying things with the plastic.
Daniel | 08.26.15 @ 14:29
Card debt grows every year as cost of living rises with not balance in peoples income to adjust to it. This list is just the tip of the iceberg but glad i am not in one of them
Bobbie | 08.26.15 @ 14:31
Interesting read with my daughter being in the Navy. I have a lot of conversations with her about saving and not spending.
Chrisitna | 08.26.15 @ 14:50
It's the ratio of income to cost of living that sucks in Texas. And, it's a Catch 22 when you're trying to get out of credit card debt and yet don't have the necessary debt to income ratio they require for any sort of consolidation loan (yet you're still making the same amount in credit card payments. Sigh).
Sarah | 08.26.15 @ 14:53
My town is not there, of course (less than 3k people) but it's interesting to see where it is highly concentrated.
Crystal | 08.26.15 @ 14:55
I don't live in a big city, but I do hear a lot of people complain about credit card debt. I cut mine years ago.
Sara | 08.26.15 @ 15:01
Well my city is not on the list...Best bet is to not build up debt like that.
Rindy | 08.26.15 @ 15:09
The bottom line is don't spend more than you can pay back no matter where you live. Interesting article!
Britt | 08.26.15 @ 15:11
Very interesting article, I would think it would be obvious that much larger cities with a poorer population would be the ones who have the most issues.
Nancy | 08.26.15 @ 15:18
It makes sense that lower income areas take longer to pay off debt. It's sad that our military personnel assume so much debt though.
Erin | 08.26.15 @ 15:19
It seems like it would just be best not to build up the debt to begin with. I understand in some cases you don't have a choice (medical bills, etc), but I think too many people just feel the need to have things now instead of saving up for them.
Blake | 08.26.15 @ 15:25
My city isn't on the list. We're pretty good about watching our credit card spending and paying it off or at least down as quickly as possible. Debt is a slippery slope if you don't budget carefully or if you live beyond your means.
Victor | 08.26.15 @ 15:41
This is a great read for anyone with family in the Forces so they would manage themselves better
Kamie | 08.26.15 @ 15:42
I am actually surprised my city is not on the list, but as much as CC can help credit scores, it can also destroy your income.
gracie | 08.26.15 @ 15:55
I am not surprised to see credit card debt sky rocketing in cities that are already expensive to live in. Jobs and wages are not keeping up with the cost of living. I am actually surprised that there weren't a few more cities listed from costly and bustling cities. I think people are trying to stay ahead of the curve to pay their cost of living bills on time keep up not fall behind and with income not keeping up with the cost of living things are getting thrown on credit cards which is a financial juggle that is tough to keep going.
Katie Greene | 08.26.15 @ 16:07
Wow. Interesting. I am so glad my husband and I have $0 in debt. We budget everything out and pay with cash or debit. It can be difficult, but it is possible.
Beverly | 08.26.15 @ 16:26
Credit cards are financially dangerous, especially if you are not fiscally responsible, which apparently most people aren't. Just because you have that credit limit doesn't mean you should use it. Thankfully, we pay off our credit card every month, in full. The first time we can't is when we will stop using them.
Zanna | 08.26.15 @ 16:34
Getting out from under debt can be very difficult, it's too easy to begin to rely on the credit card and let the balances mount up. Most people don't seem to realize that they will never pay it off if they only pay the minimum amount, too.
trish | 08.26.15 @ 16:42
While we are not on the list, I know plenty of people that are in debt around me. CC debt is scary. While most avoidable, there are some that have no other choice.
Steffanie | 08.26.15 @ 16:44
Very interesting article. Trying to live debt free is so hard to do in today's world.
Christina | 08.26.15 @ 16:53
I'm glad I don't live in one of these. The bigger the city the more of the products are and the cost of living rises but what people are paid is not enough to cover it. Best not to go in that much debt.
Joni | 08.26.15 @ 17:19
I don't live in any of those cities and I can believe that military ha a higher debt ratio than someone that isn't in the military.
Crystal | 08.26.15 @ 17:20
I see credit card debt is a big problem. You really need to consider all debt when applying for credit cards.
Andrea | 08.26.15 @ 17:34
Credit card debt depends on the cardholder. Regardless of where you live..
Chelsey | 08.26.15 @ 17:41
My city wasn't on the list. But I think its sad that our military families takes on more debt. They should be paid well as they defend our country.
Heather | 08.26.15 @ 17:42
So glad my city and the one I want to move to isn't on the list. But credit card debt is what you as an individual make if it. If you keep it under control you won't have a problem.
Alec | 08.26.15 @ 18:24
I'm absolutely shocked that my city isn't on the list. I'm glad though because it would make a lot of the population more likely to be stressed and grumpy! I do my best not to spend on my credit card or if I do, I pay it off as quickly as possible. Interest and the debt in general hanging over you cause so much stress it'll make you sick!
Angie | 08.26.15 @ 19:51
I am guilty of leaning on my cards to pay bills. I have recently done a home equity loan with my credit union at an introductory rate of 3.99% that will go back to 8% at the end of a year. It will help immensely, as several of my cards were 18 to 22%. Lesson learned...it will still take 5 years to pay it off, unless I am able to generate more income to double up on payments.
Apryl | 08.26.15 @ 20:01
Credi card debt is horrible regardless of location.
$commenter.renderDisplayableName() | 10.27.20 @ 06:11