Trending News: Where You Live Impacts How Long It Takes To Pay Off Credit Card Debt
Why Is This Important?
Because some places have worse credit card debt than others.
Long Story Short
A study conducted by CreditCards.com broke down the 25 best and worst cities for credit card debt.
Paying off credit card debt is a bummer no matter where you live, but according to a new study, where you live may have something to do with how long it takes you to get that burden off your shoulders.
CreditCards.com looked at the 25 largest cities in the U.S. and calculated how long it would take someone earning the median income in that city to pay off the average credit card balance in that city.
Credit counselors suggest that you put 15 percent of your earnings toward your credit card debt, so this was the benchmark used in the study to calculate the length of time it would take an average person in each city to pay off their debt. The study also assumed a 13 percent interest rate would be applied to the debts.
The city that boasted the quickest payback time was tech mecca San Francisco. Although the average Bay Area resident held a debt of $4,393 — just slightly under the U.S. average of $4,410 — but with a median yearly income of $44, 491, they were able
to pay it off in a swift nine months, incurring only $227 in interest. An economist quoted in the article explained that high income does not necessarily equal low credit card debt: "High income means creditworthiness," said Comerica Bank Chief Economist Robert Dye "People are going to be comfortable carrying more debt."
Over in San Antonio. the credit debt was not too much higher at $4880, but for the average person making $27,491, it could take 16 months to pay off the debt, including an extra $448 in interest.
Washington D.C. had the largest average credit card debt at $5,046, but with a hefty median income of $45,909 could wipe it out in 10 months, only incurring $286 in interest.
The top five cities for swift credit card debt payments were: The Bay Area, Boston, Washington, Minneapolis and New York. The bottom five were: San Diego, Houston, Miami/Fort Lauderdale, Atlanta, Dallas/Fort Worth and lastly San Antonio.
Check out the full list and findings here.
Own The Conversation
Ask The Big Question. If you know you can't afford to devote 15 percent of your income to credit card payments, should you purposely keep your credit limit low to avoid unmanageable interest?
Disrupt Your Feed. The U.S. probably has too much credit card debt, period.
Drop This Fact. According to Cardhub. during the first quarter of 2015, U.S. consumers paid $34.7 billion toward credit card debt.