Chicago and Houston rank as cities with the most economically disadvantaged people, new report says. Personal finance site WalletHub.
The analysis ranked 100 large cities based on several metrics. financial extortionbankruptcy filings, credit scores, accounts that avoided financial trouble, and more.
The researchers also tabulated how often people in each city searched for “debt” or “loan” on the Internet as a measure of financial concerns.
“The search index is a good indicator of people who are struggling but have not yet taken action to get out of debt,” said Cassandra Happe, an analyst at WalletHub.
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Chicago, Houston, New York, and Los Angeles have the highest percentages of people suffering from financial duress.
New York and Los Angeles ranked third and fourth on the financial distress list. Boise, Idaho, ranked last. This means the city has the fewest residents in financial crisis.
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To control for each city’s size, the rankings focused more on crash rates than raw numbers.
The report comes at a time when Americans are spending more, borrowing more and saving less.
Credit card debt, an increasingly risky form of borrowing, reached a record $1.13 trillion at the end of last year.
The personal saving rate of savers as a percentage of their income was 3.8% in January, down from about 7% before the coronavirus pandemic.
Rising interest rates and consumer prices are putting people in financial straits.
“As inflation started, people started spending more,” said Mike Croxon, CEO of the National Credit Counseling Foundation. “But they didn’t have free cash flow anymore, so a lot of people started using unsecured debt” and borrowing on credit cards.
Inflation reached a 40-year high of 9.1% in summer 2022. Prices continue to rise.
As part of its aggressive campaign to curb inflation, the Fed has raised its key short-term interest rate from near zero to a 22-year high of 5.25% to 5.5% from March 2022 to July 2023.
Inflation and rising interest rates are hurting urban consumers
Researchers say inflation is hurting consumers in some of the cities near the top of WalletHub’s new rankings.
“Rising inflation and generally rising costs of goods have had a significant impact on what we’ve seen over the past year or so,” Happe said. “Many people are using credit cards and loans to fill that gap.”
Chicago, the city with the most economically disadvantaged citizens, ranks 6th.th Another recent WalletHub city list: The biggest inflation problem.Houston is 10thth It ranks among 23 metropolitan areas on that list. According to the report, prices in Houston rose 4.5% over the past year, while prices in Chicago rose 3.3%.
Of the 100 cities WalletHub studied, Chicago saw the largest increase in the percentage of citizens with credit account issues, increasing by nearly 30% from Q4 2022 to Q4 2023.
That means more Chicagoans are being allowed to skip payments and have their accounts put on hold or postponed due to financial hardship.
Chicago also has one of the highest search interest rates for “debt” and “loan,” indicating residents are already in debt, looking to borrow, or looking for debt counseling. .
“The good news is that people are raising their hands and asking for help,” says Croxon of the National Credit Counseling Foundation.
Houston residents also spend a lot of time searching for loans and debt forgiveness online. Houston has a relatively high percentage of residents with financially distressed accounts, accounting for more than 8% of the population.
Recession risk?Americans are saving less and spending more.
What are the top 10 cities with the most residents experiencing financial difficulties?
Other cities ranked in the top 10 for economically disadvantaged citizens by WalletHub are:
3. new york. The city tied for number one (with Chicago, Houston, and Los Angeles) in search interest for “loans” and debt. New York ranks sixth among large cities in increasing bankruptcy filings from 2022 to 2023.
Four. Los Angeles. Angelenos spend a lot of time searching online about debt. The city also ranks low in credit scores, meaning many Angeleno residents have weak or weakened credit.
Five. Dallas. The city ranks high because the number of bankruptcy filings is increasing year by year, and there is also a high level of interest in investigating debts and loans. In a previous report, WalletHub ranked Dallas No. 1 in the nation for rising inflation.
6. Las Vegas. Sin City ranks high on several indicators of consumer distress, including poor credit scores, struggling residents with bank accounts, increased bankruptcy filings and people searching online for debt.
7. san antonio, Texas. The city ranks high in the percentage of residents whose bank accounts are insolvent, with the number of bankruptcy filings increasing every year.
8. Atlanta. The city is tied with Dallas (and other cities) for fifth place in the ranking of online search frequency for debt and loans.
9. Riverside, California. Riverside ranks high in online searches for debt.
Ten. Jacksonville, Florida. Many residents have credit accounts and are in trouble. This city ranks high in internet searches for debt.