In general, higher-income cities had higher average credit debt, with Los Altos and Los Gatos having the highest and fourth-highest per capita incomes in the region. Lower-income cities like East Palo Alto and Gilroy, with the lowest and second-lowest per capita incomes, generally have higher average lengths of time to pay off their credit card debts.
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See the infographic below this article for a complete list of cities ranked by credit card debt and the average months it takes to pay off that debt, as well as the correlation between those figures and per capita income.
The study looked at the largest 2,547 cities in the United States, and Silicon Valley cities made up eight of the top 12 cities when ranked by least amount of time to pay their debt off (see above for a chart showing the nationwide rankings).
For a description of the CreditHub studys methodology, click here.
*For purposes of this article, Silicon Valley is defined as Santa Clara County, cities in San Mateo County adjacent to and south of the San Mateo Bridge, and Fremont, Newark and Union City.
Bryce Druzin is economic development reporter at the Silicon Valley Business Journal.
Consumers paid off almost $35 billion of credit card debt in the first quarter of 2015, then racked up another $53.3 billion over the next two quarters, according to CardHub.
If they keep it up, CardHub estimates consumers will end 2015 with a net increase of $68.5 billion in credit card debt, putting us perilously close to a tipping point at which balances become unsustainable and delinquency rates skyrocket, according to the report.
Total credit card debt is expected to pass $900 billion by the end of the year. That will mean the average households debt balance will be over $8,000 and just $400 below the level CardHub says is unsustainable.
CardHub has been conducting its credit card survey since 200,9 when consumers removed $875 million from their debt balance. By 2010, the net result in debt load increased 377%, followed by a 1,820% increase in 2011. After a 22% drop in 2012, the debt load has been climbing ever since.
The almost $11 billion decline in new credit card debt between the second and third quarters is not a sign of consumers improving credit responsibility. Instead, its part of a historical trend where a first-quarter paydown is followed by a spike in debt levels during the second quarter, a more-modest increase during the third quarter, and a relatively massive buildup to end the year.
CardHub noted that charge-offs are down on a year-over-year basis and are close to historical lows. Creditors removed just $6 billion from debtholders balances in the third quarter.
Furthermore, consumers have reverted to pre-downturn bad habits in eight of the last 10 quarters, CardHub found.
As a matter of fact, the new Q3 debt $21.3 billion is the largest third-quarter increase since the financial crisis, CardHub found, and 71% higher than the post-recession average.
Something clearly has to give, and it does not seem to be our spending habits, CardHub wrote.
--- Read How Financially Smart Are Americans? on ThinkAdvisor.
With the holidays comes spending; for some, that can mean the accumulation of credit card debt.
According to a CreditCards.com survey, 20 percent of Americans say they will be in debt forever. And CardHub's 2015 credit card debt study recently found that consumers racked up $21.3 billion in new credit card debt between July and September.
Former Barclays bank executive Nick Clements--who founded MagnifyMoney, an online financial education site for consumers, and has worked and spoken in Chattanooga--came up with a list of tips for consumers who want to avoid credit card traps.
He specifically addressed store credit cards.
After all, it can be tempting when youre at the register and the clerk says, Would you like 10 percent off on todays purchase? All you have to do is sign up for the store card. It only takes a few minutes.
But Clements said that clerks are counting on shoppers spending more with the card.
What they are counting on is whatever you spend that day, youre thinking, This is great. Its a license for me to spend to save, he said.
But to make store cards work for you, planning is important, he said.
Clements used to run a large credit card company, so he knows insider secrets.
In addition to hoping that consumers will spend more, credit card companies generally have to pay a lot of money to retailers to get the store deal. And they have to make it up somehow--usually with high interest rates, regardless of a persons credit score.
The interest rates on store cards are outrageously high, he said.
But it is possible for consumers to make the cards work for them, he said.
For example, he said:
You can get a good deal. I once moved into a new house. I was very tactical: I went shopping on a day with deep in-store discounts ... and I applied for a credit card that had a 10 percent discount for purchases made on the day. Because I knew I would be spending more than $2,000, the savings (more than $200 for the credit card purchase alone) was a great deal. And, most importantly, I paid the balance in full at the end of the month. I had planned my purchase in advance and used the store card offer to save more money. That is the only way to get a good deal.
He also noted that applying for the card means a hard inquiry will hit your credit report and your score. That isnt a major impact in many cases, so he said he doesnt want to scare people.
If you know you arent going to buy or refinance a home within the next year or so, the inquiry shouldnt be too big of a problem, he said.
Click here to see the rest of Clements tips to avoid credit card pitfalls.
The total amount of debt owed by US consumers has reached $11.91 trillion, with the average indebted household owing $15,355 in credit card debt alone, according to NerdWallets Annual American Household Credit Card Debt Study. As one of the most expensive types of debt, credit card debt costs consumers an average of $2,630 per year in interest, assuming an average APR of 18 percent.
Its alarming that household debt is on the rise, but its also important to recognize that not all debt is created equal, says Sean McQuay, NerdWallets Credit Card Associate. Under the right circumstances, mortgage, student and auto loan debt can be helpful in building a bright financial future. That said, its critical for Americans to understand their debt and recognize that certain types of debt are unnecessarily costly.
Total debt owed by US consumers
- $15,355 per household; $712 billion total
- $165,892 per household; $8.12 trillion total
- $26,530 per household; $1.03 trillion total
- $47,712 per household; $1.21 trillion total
- $129,579 per household; $11.91 trillion
The Why Behind Debt in the US
NerdWallets Annual American Household Credit Card Debt Statistics Study analyzes data from several sources, including the New York Federal Reserve and the US Census Bureau, as well as a study conducted online by Harris Poll commissioned by NerdWallet. Key findings include:
The cost of living is outpacing income growth. While median household income has grown 26 percent since 2003, household expenses have outpaced it significantly -- with medical costs growing by 51 percent and food and beverage prices increasing by 37 percent in that same span. Interest payments add up.
The average household already is paying a total of $6,658 in interest per year, which means that 9 percent of the average household income ($75,591) is being spent on interest alone. Credit card debt is particularly costly. The average American household with credit card debt could spend up to 44 years paying it down if only making the minimum payments each month.
A big part of getting out of debt is admitting you have a problem. Unfortunately, debt -- particularly credit card debt -- carries a stigma that can be very damaging and counterproductive, says McQuay. An online survey we commissioned Harris Poll to conduct found that 35 percent of Americans consider credit card debt to be the most embarrassing debt to tell others about having and 70 percent think there is a greater stigma around credit card debt than any other type of debt. If this stigma leads to avoidance and inaction, were in trouble. Americans need to come to terms with their debt and make an active plan to climb out of it.