Chicago, Houston are top cities with financially distresssed residents

Chicago and Houston rank as the cities with the most people in financial distress, according to a new report from the personal finance site WalletHub.

The analysis ranked 100 large cities on several metrics of financial duress, including bankruptcy filings, credit scores and accounts in forbearance over money troubles.

Researchers also tabulated how often people in each city searched the internet for “debt” or “loans,” a measure of financial concern.

“The search index is a good indicator of people who are struggling but maybe haven’t taken action to try to get out of debt just yet,” said Cassandra Happe, a WalletHub analyst.

New York and Los Angeles ranked third and fourth on the financial distress list. Boise, Idaho, ranked last − which means that city has the fewest citizens in financial peril.

To control for each city’s size, the ranking emphasized rates of distress over raw numbers.

The report comes at a moment when Americans are spending more, borrowing more and saving less.

Credit card debt, an increasingly perilous form of borrowing, reached a record $1.13 trillion at the end of last year.

The personal savings rate, the share of income that savers sock away, was 3.8% in January, down from about 7% before the COVID-19 pandemic.

People are falling behind in their finances amid a surge in interest rates and consumer prices.

“As inflation kicked in, people spent more,” said Mike Croxson, CEO of the National Foundation for Credit Counseling. “But they didn’t have free cash flow anymore, so a lot of people began using unsecured debt,” borrowing on their credit cards.

Inflation peaked at a 40-year high of 9.1% in summer 2022. Prices continue to creep up.

In an aggressive campaign to tamp down inflation, the Fed raised its key

The Top 10 1. Chicago 2. Houston 3. New York 4. Los Angeles 5. Dallas 6. Las Vegas 7. San Antonio, Texas 8. Atlanta 9. Riverside, California 10. Jacksonville, Florida

short-term interest rate from near zero to a 22-year high of 5.25% to 5.5% between March 2022 and July 2023.

Inflation is vexing consumers in several cities that sit near the top of the new WalletHub ranking, researchers said.

Chicago, the city with the most citizens in financial distress, ranked 6th on another recent WalletHub list of cities with the biggest inflation problems. Houston ranked 10th on that list, among 23 metropolitan areas. Houston prices rose 4.5% in the past year, and Chicago prices rose 3.3%, the report said.

Of the 100 cities WalletHub studied, Chicago had the largest increase in the share of citizens with credit accounts in distress, a nearly 30% bump from the fourth quarter of 2022 to the fourth quarter of 2023.

Chicago also had one of the highest rates of search interest in “debt” and “loans,” a sign that residents are already in debt, seeking to borrow or searching for debt counseling.

“The good news is, people are raising their hand and looking for help,” said Croxson of the National Foundation for Credit Counseling.

Houstonians, too, are spending a lot of time online searching for loans or debt relief. Houston ranked relatively high for its share of residents with accounts in financial distress, more than 8% of the population.