According to a new study by WalletHub, Dallas ranked among the top 10 cities with the least-sustainable credit card debt.
The company compiled the rankings of 182 cities based on the median credit card debt and the median income for the residents of each city, assuming a 17.13% credit card interest rate (which is the national average).
“Sustainable debt refers to debt that can be paid without going into default,” said Jill Gonzalez, a WalletHub analyst. The difference between sustainable and unsustainable debt is that sustainable debt can be paid off while unsustainable debt cannot and will most likely lead to default or bankruptcy.
“If a person can afford to pay their debt in a reasonable amount of time without defaulting, their debt is sustainable,” Gonzalez said in an interview.
The WalletHub report, 2022’s Cities with the Least Sustainable Credit Card Debt, found that Dallas landed the 6th spot because the payoff time for the median credit card debt per person is more than six years. “Plus, the interest cost during payoff is almost $1,400, which is one of the highest in the country,” Gonzalez told Dallas Express.
“The shorter, the better,” Gonzalez said. “Ideally, you should not carry credit card debt and pay your bill in full each month but if that doesn’t happen, the longer you drag it, the more interest you’ll pay.”
Fremont, California, landed the top spot for the most-sustainable debt because, theoretically, residents would take only a little more than 18 months to pay it off, which is the shortest time frame out of all the cities analyzed, according to WalletHub data.
“The interest cost during payoff is just $277,” Gonzalez said. “The reason Fremont’s residents are able to have the most-sustainable credit card debt is the fact that they have the highest median earnings at almost $90,000. The median earnings in Fremont are more than double those in Dallas.”
Although Miami has a reputation for being a fun city, residents living in the Florida oasis have the least-sustainable debt because 7.5 years is the time frame required to pay the debt off. “The interest costs during payoff amount to more than $1,600, which is the second largest in the country,” Gonzalez said. “One of the reasons for the unsustainable credit card debt is the low median earnings, which is less than $34,000.”
Fort Worth and Grand Prairie ranked much lower on the list than Dallas, at No. 73 and No. 90, respectively. “Fort Worth and Grand Prairie credit card holders have debt that is more-sustainable than Dallas, though they still rank in the top half,” Gonzalez said. “The time frame required to pay off debt in these cities is more than four years. Grand Prairie residents, in particular, have a lower median amount of credit card debt of just $2,000 while Fort Worth residents have higher median earnings of more than $46,000.”
Plano is the highest-ranking DFW city for most-sustainable debt, even though Plano’s median credit card debt is relatively high. “It is more-sustainable mainly because of Plano residents’ high median earnings, which is almost $64,000,” Gonzalez added. “Income plays the most important role. It’s basically the main thing determining a person’s debt sustainability.”