Consumer debt is increasing. Interest rates are high, and Americans now owe a record $1.14 trillion on their credit cards. Some cities are racking up more debt than others.
A new WalletHub study ranks Boston as the number one city in the U.S. with highest amount of accumulated debt from Q1 to Q2 in 2024.
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“This increase is happening quite fast," said Christie Matherne, an editor at WalletHub.
The average credit card balance increased by 6% this year alone, rising to an average of $9,096 in Boston.
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“Boston's average total debt came in 14th in the nation. And this isn't a good sign,” explained Matherne. “It's high debt paired with high debt increase.”
And it isn’t just credit card debt. Personal loan balances increased by around 3.5% during the same period – the third-largest uptick in the country.
“A lot of people end up taking out a personal loan when they need a substantial amount of money and they need the cash right there versus using a card when you need it,” said Matherne.
According to the New York Federal Reserve, borrowers are also falling behind on their payments. Credit card delinquencies surged more than 50% in 2023.
“It's hard to get out of debt, save money, and then plan for school shopping, and the holidays that are coming up,” said April Lewis-Parks, director of financial education at Consolidated Credit Counseling Services.
“It's so important to write down all of your debts and the interest rates and really go over it and see if it aligns with your values. And how do you want to approach your life,” explained Lewis-Parks. “If credit card debt is weighing you down, or student loan debt is weighing you down, identify those and really make a plan to dedicate more money towards those debts to pay them off.”
Once you have a plan, experts recommend prioritizing the debt with the highest interest rates first. If that doesn’t work, try focusing on the debt with the lowest balance and work your way up.
“Once that smaller debt is gone, take that amount of money that you're spending towards that, put it to your next smallest debt and so forth,” said Lewis-Parks.
See if you’re eligible for a lower card interest rate and look into balance transfer credit cards. If you’re struggling to make the minimum payment, experts suggest contacting a credit counseling service.
“We always don't have to shoot for the moon and say, I’m going to pay everything off, because sometimes it's not realistic. Make micro moves that will really help you pay down your debt and get your finances back on track,” Lewis-Parks said.
Here’s another tip – cut out all unnecessary expenses. Review your monthly budget and see where you can save some money.
You can use that extra cash to help pay off your debts much faster and help you get back on track with your finances.
There is a lot of free help if you look for it.
