There are several reasons individuals may rack up thousands of dollars in credit card debt, ranging from job loss and medical bills to irresponsible spending and living beyond their means. While these factors can impact consumers nationwide, a recent study revealed the U.S. markets where citizens carried the highest credit balances and were at the highest risk of falling behind on payments and incurring fees.
According to a new study from account management firm Manilla.com, the borrowers with the highest average credit card balances are scattered across the country, rather than being concentrated in a single region. Kansas City, Missouri topped the list, with residents carrying an average balance of $2,743.09 as of April 1. San Diego ran a close second with average balances of $2,667.75, and Baltimore came in third place with citizens carrying roughly $2,451.53 in debt. New Orleans, Tampa-St. Petersburg and Chicago fell last on the list with average balances of $2,180.13, $2,145.35 and $2,018.44, respectively.
Although average credit card balances declined 67 percent from the average balances at the end of 2012, Manilla.com CEO Jim Schinella noted that high balances can raise the risk of late payments, heavy interest charges and fees, while also putting consumers’ credit standing in jeopardy.
“Consumers need to keep a close eye on all accounts, particularly credit cards, as they can negatively impact your credit rating if they are forgotten or left unpaid,” said Schinella.
Is location contributing to debt?
While an individual’s location in and of itself may not directly impact their debt, the lifestyle they choose to live can. For example, individuals who live in areas where the cost of living is extremely high – such as San Francisco, New York and Boston – choosing housing options that fall within their budget and income is crucial in helping consumers stick to a budget and avoid relying on their credit cards to make ends meet. A recent Yahoo Finance article noted that a common sign that may hint they are living beyond their means is if mortgage payments or rent is higher than one week’s salary.
Other costs, such as groceries and car insurance may also vary greatly by location. For these reasons, it’s important for individuals to factor in these expenses when making major decisions about where they want to live and what they can truly afford. If individuals are struggling to make their mortgage payments and put food on the table, relocating outside a major metropolitan area may be a more affordable alternative and help them keep more money in the bank.