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10 Best Places to Pay Down Debt

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Americans’ debt balances continued climbing in 2018, with total consumer debt tracking to top $4 trillion by the end of that year. With balances climbing high, many borrowers will want to use the new year to take their debt down a peg. For those who do so, prioritizing paying off debt can bring major rewards both in the near and long distance future.

But despite the benefits, getting ahead of debt can be a struggle for many. We wanted to find out whether some major U.S. cities afford their residents more opportunities to pay down existing debt than others. To do so, we ranked the 50 most populous U.S. metropolitan areas according to the following factors that reflect residents’ abilities to pay down debt:

  • Average credit utilization, as a percentage
  • Average monthly rent-to-income ratio, as a percentage
  • Regional prices on goods and services
  • Local unemployment rate
  • State’s scoring on debt-friendly laws and policies

Key takeaways

  • Costs of living play a large role in determining where it’s easiest and hardest to pay down debt. All of the 10 best places to pay off debt had rent-to-income ratios below 20%, and all but one have below-average prices on goods and services.
  • Cincinnati tops our list of best places to pay down debt, thanks to an exceptionally low cost of living and a relatively good unemployment rate. The metro received a final score of 77.2.
  • Milwaukee and Minneapolis follow closely behind with final scores of 75.6 and 75.5, respectively.
  • Riverside, Calif., is a tougher place to pay off debt, thanks to a high cost of living and high unemployment. The metro received a final score of 31.8.
  • Residents of Detroit and Los Angeles are also challenged, with final scores of 40.8 and 42.3, respectively.

Understanding these rankings

To determine which places are best for paying down debt, we compared factors related to residents’ abilities to pay down debt in the 50 largest metros in the country. Here’s a look at what we considered, and how each factor fits into the picture when weighing how easy or hard it may be to repay debt in this city:

  • Average credit utilization rate. Credit utilization is the amount of available credit, usually from credit and charge cards, a person has currently run up. If a cardholder has a $10,000 credit limit on their cards and keeps a balance of $3,000, for example, that person has a credit utilization rate of 30%. A higher average credit utilization ratio means that locals’ debt may be inching up instead of down and is a sign they might struggle to pay off credit card balances.
  • Percentage of median household income needed to pay the median rent. When it comes to basic expenses, housing is the big one. Cheaper housing makes affordable rent easier to find — yet cities with cheaper housing will sometimes also have lower local wages, too. To account for that, we calculated the percentage of a median household income that would be spent to pay the median rent in the metro
  • Regional Price Parity for goods and services. Goods and services cost more in some places than in others, and the amount spent on everything from toothbrushes to auto repair can quickly add up. The regional price parity from the Bureau of Labor Statistics captures those local differences. The average cost of goods and services nationwide is represented by 100, with cities being scored higher for expensive costs and lower for cheaper prices.
  • Unemployment rate. A low unemployment rate shows that fewer people are experiencing the hardship of job loss. But it also means that the city has less people who are looking for jobs while out of work, giving job seekers more leverage and forcing employers to compete for qualified candidates. Simply put, all local workers will have great opportunity to land a new job with higher pay.
  • State debtor protection score. The National Consumer Law Center grades each state based on the protections it provides to debtors through local laws against debt-related property seizure and wage garnishments. For people trying to get a handle on their debt, losing access to a car or enough of a paycheck to pay the electric bill can put them even deeper into a hole.

We scored cities on each of these factors, then used that to generate a final ranking score to represent whether these factors worked for or against residents paying off debt. The results show which cities are the best places to pay off debt — and the worst.

10 best places to pay down debt

10 Best Places to Pay Down Debt
Rank Metro Final Score Average Credit Utilization % of Gross Household Income Spent on Rent Regional Price Parity for Goods & Services Unemployment Rate State Debtor Protection Score
1 Cincinnati 77.2 32.2% 15.9% 92.8 5.8% C
2 Milwaukee 75.6 31.3% 18.0% 95.7 5.5% B
3 Minneapolis 75.5 31.7% 16.3% 100.3 4.3% C
4 Nashville, Tenn. 75.0 30.9% 19.2% 95.5 5.0% C
5 Oklahoma City 73.8 33.0% 18.1% 95.5 5.0% B
5 Raleigh, N.C. 73.8 32.9% 17.6% 95.7 5.2% B
7 Kansas City, Mo. 73.7 30.8% 17.4% 96.8 4.9% D
8 Austin, Texas 73.5 32.2% 19.9% 95.7 4.7% B
9 Buffalo, N.Y. 71.5 32.0% 17.1% 99.3 5.6% B
10 Columbus, Ohio 70.7 33.6% 17.7% 95.2 5.3% C

In the 10 best cities to pay down debt, locals have several factors working in their favor.

First off, all of these cities’ average revolving credit balances that are at or just under a third of their limits, which is right in line with a good credit utilization ratio of 30% or less. With lower balances to begin with, borrowers in these cities can more easily wrangle these types of debt.

Low costs of living also work in residents’ favor. Typical rent costs in all 10 cities is less than under 20% of income, and Minneapolis is the only one with a goods and services price index above the national average.

Rent costs compared to local wages are lowest in Cincinnati, claiming just 15.9% of median gross income. The Ohio city also has the lowest prices on goods and services. Austin locals pay the highest rents relative to their incomes, at 19.9%.

Lastly, these 10 cities also boasted below-average unemployment rates and were more likely to have solid protections for debtors.

10 worst places to pay down debt

10 Worst Places to Pay Down Debt
Rank Metro Final Score Average Credit Utilization % of Gross Household Income Spent on Rent Regional Price Parity for Goods & Services Unemployment Rate State Debtor Protection Score
50 Riverside, Calif. 31.8 34.7% 24.6% 104.2 9.9% C
49 Detroit 40.8 34.0% 19.0% 98.8 8.1% F
48 Los Angeles 42.3 32.6% 25.6% 106.1 7.3% C
47 New York 42.7 33.1% 22.3% 112.9 6.9% B
46 Miami 43.6 32.0% 28.6% 100.8 7.5% C
45 San Diego 45.2 33.6% 24.9% 102.9 7.1% C
44 Virginia Beach, Va. 49.6 36.3% 21.8% 95.6 6.6% D
43 Philadelphia 50.5 32.3% 19.5% 104.6 7.4% D
42 Las Vegas 51.5 32.8% 22.9% 98.7 8.3% B
41 Baltimore 52.7 33.9% 19.4% 104.0 6.0% D

Residents living in these 10 cities, however, might find themselves having to work harder to pay off debt. The most consistent differences between the 10 best cities and the 10 worst were costs of living and unemployment rates.

All but three of the 10 cities, for example, have prices on goods and services that are above the national average — and New York’s costs exceed the national average by a steep 12.9%.

Rent costs are also steeper in these cities, when compared to median local wages. Seven of these cities have rent that’s more than 20% of gross incomes, and Miami has the highest rents relative to income, claiming 28.6% of a typical resident’s pay.

Unemployment rates are also significantly higher among these cities, peaking at 9.9% among Riverside’s working population. With fewer employment opportunities, high prices, and steep living costs relative to income, these cities aren’t offering ideal circumstances for paying off debt.

Tips to pay down debt — wherever you live

Our study proves that where you live can have a big impact on your debt repayment, for better or worse. But how you choose to tackle your debt can have an even bigger effect on how fast your can pay it off.

With the right financial tools and debt strategies, you can counterbalance negative circumstances or capitalize on the positive to make more progress toward paying down debt. Follow these tips to accelerate and optimize your debt repayment, no matter where you live.

Budget for extra debt payments. Setting and following a budget puts you back in control of your money, and your debt. Write a line item for extra debt payments into your budget. Review your costs and spending to see where you could cut back and free up more money to pay off debt.

Prioritize your debts wisely. Instead of spreading extra payments out across multiple accounts, it can be more effective to put it all toward a single balance. Paying off a high-interest account first, such as a credit card, will help you avoid interest charges, save money and get out of debt faster. Or you might prefer to pay down a debt with a variable rate that could climb higher as interest rates rise. Other people prefer to pay off the smallest balance first, which can free up monthly cash flow and keep you motivated with a quick win.

Consolidate or refinance debt. If your interest rates are too high, or you’re unhappy with your monthly payments, look into refinancing or consolidating your debt. This move will use a new loan to repay and replace the existing debt, giving you the chance to potentially secure new terms and lower rates.

For credit card consolidation you could get a personal loan or perform a balance transfer to pay debt off faster. Student loan refinancing or auto loan refinancing could also help get you closer to your debt repayment goals.

Earn extra money to put toward debt. Growing your income is another way to generate more funds you can use to pay off debt faster. You can offer to work overtime, pick up extra shifts, or talk to your boss about how you can earn a raise this year. Outside of your day job, a side hustle or second job can bring in new money you can use to target debts.

As you pay down debt, you’ll see immediate benefits such as falling debt balances, shrinking interest costs and freed up cash flow for every account that’s zeroed out. In the long-term, paying down debt can grow your net worth and free up more money to save for major purchases, contribute to retirement, and even invest.

Making debt repayment a central focus can have a meaningful long-term positive impact on financial health. So wherever you live, it’s worthwhile to do more to manage your debt this year.

Paying down debt in 50 U.S. Cities

Wondering if your city is better or worse for paying off debt? Here’s a full ranking of all 50 cities we surveyed, along with the data points we collected for each one.


Each metric is aggregated to the 50 largest metropolitan statistical areas (“MSAs”) in the United States.  Average credit utilization was calculated from a sample of over 85,000 August credit reports of LendingTree users; median household incomes, median rents, and unemployment rates are from the American Community Survey 2017 five-year estimates from the US Census; the regional price parity is the average of 2016 regional price parities for goods and services published by the Bureau of Labor Statistics; and the debt protection scores were provided by the National Consumer Law Center. Each of the five metrics were given a value according to their relative location between the highest and lowest values. The values were then summed and divided by five for an equal weighting.

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