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If you live in New York, you’re likely to have more credit cards than the national average, but carry lower credit card balances. On the other side of the spectrum, people living in Atlanta and Columbus hold fewer credit cards, but run up some of the highest average monthly balances on their credit cards in the nation.
So reports a recent study by Experian on credit card trends for 20 major American cities. According to the study, Americans are cutting back on credit card usage and even cutting up their credit cards. However, as the above numbers illustrate, carrying fewer credit cards doesn’t necessarily translate into lower levels of credit card debt—in fact, sometimes the opposite is the case.
The study examined the average monthly balance and number of open credit cards typical in each of the top 20 major U.S. metropolitan areas. Overall, researchers found that consumers are opening 26 percent fewer credit card accounts now, compared to three years ago. The study also noted that, except in a few cases, cardholders displayed a preference for bank-issued credit cards over store credit cards.
When it comes to quantity of cards and the monthly balance put on those cards, there wasn’t the direct correlation one might have expected. New Yorkers topped out for the highest number of open credit cards with an average of 3.77 cards per person. Phoenix came in last with an average of 2.78 credit cards per person. However, the average New Yorker’s monthly credit card balance weighed in at $5,713 while the average balance carried by those in Phoenix tallied up to $6,058.
Atlanta residents had one of the highest average monthly credit card balances, on average carrying $6,753 on their credit cards each month. Atlantians, however, only have an average of 3.06 cards per person—the same number as their Houston counterparts, who owe over $1,400 less each month. Columbus residents had the highest monthly debt average, carrying $6,734 forward on an average of 3.17 cards per person.
Further, while residents of most major cities carry more bank cards than retail credit cards, Atlanta and Columbus were exceptions. Residents of the two cities were among four major metropolitan areas where residents have more store credit cards than bank credit cards, the other two being Pittsburgh and Miami.
Wonder who had the lowest average credit card balances in the nation? That distinction went to people living in San Francisco and Houston, who carried a balance of $5,323 for San Francisco and $5,328 for Houston on an average of 3.24 and 3.06 cards respectively. Los Angeles residents came in third, with $5,681 in average monthly credit card balances on an average of 3.16 cards.
In short, the amount that people charge to their credit cards at present appears to have little to do with the number of credit cards they have.
“As expected with the current financial environment, we can see that the average person has fewer cards in their wallet and is using credit differently than in the past,” said Michele Raneri, senior director of analytics, Experian. “This implies that many American consumers are relying less on cards and potentially trying to pay down debt.”
At the end of the day, cardholders benefit more from paying down their cards than they do from closing one or two of them: the consumer with more cards and less debt is likelier to have a better credit score. In fact, shutting down a credit card account can lower one’s credit score by causing the so-called credit utilization ratio to increase. The credit utilization ratio is a measure of how much debt a consumer carries in relation to his or her total available credit. The lower this number, the better; the ratio comprises a full 30 percent of FICO scores.
To see how the average number of credit cards and credit card balances for your city, see here for the full Experian report.
