The 10 US cities where credit card balances are increasing the most
A new report from CompareCards.com finds that Americans are increasingly reliant on credit cards. Across 50 major U.S. cities, credit card balances grew 3.6 percent on average over the past year, according to the report, which cites data from My LendingTree. In some cities, average balances grew more than 10 percent.
Austin, Texas, ranks No. 1 overall. In September 2017, residents had an average credit card balance of $6,165, the report finds, and this past September it grew to $6,924. That’s an increase of 12.3 percent.
The 10 states with the largest credit-card balance growth are mostly in the South and the West, with four in California, including San Jose, where the average balance rose 10 percent.
With $7,649, residents of Washington, D.C., have the highest average credit balance overall this year, while those living in Indianapolis, Indiana, have the lowest: $5,393.
Rising credit card balances can signify struggle, which is why the report calls the growth “discouraging.” It attributes the increases in part to high cost-of-living expenses and student loan debt.
On the other hand, rising credit card balances can also imply that things are going well, says senior industry analyst Matt Schulz, the author of the report: “In good economic times, some Americans use credit cards as a short-term loan to bankroll investments such as a home remodel or a small business expansion.
“That’s a sign that the borrower feels confident in their financial situation.”
A number of up-and-coming tech hubs cluster at the top of the list, and many of the metropolitan areas where balances have grown substantially are bustling. Over the summer, Austin was named the top place to live in America by U.S. News & World Report, based on affordability, job prospects and quality of life. Texas also ranked as CNBC’s top state for business this year.
Still, the report says, “the truth is that when you carry credit card debt during good economic times, it is likely that you aren’t putting enough money away for when things go bad.”
Of the top 50 metro areas, balances went down in only six.
“The four cities that saw the biggest decreases are all among the 15 smallest cities in our survey, including Oklahoma City; Hartford, Conn.; Salt Lake City, Utah; and the city with the biggest decrease, Nashville,” the report states.
“Many residents of those cities are likely taking advantage of a combination of the current strong national economy and the relatively low costs of living to knock down some of their credit card balances — and that’s never a bad thing.”
Paying off debt can keep you from having to pay hundreds or even thousands of dollars in interest every year. Keeping your balances low also helps your credit score.
For a closer look at the data, or to see where your city appears in the rankings, check out the full report.
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