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January 17, 2017

Study: It would take forever to pay off the average credit card debt in West Chester

Carrying credit card debt is essentially an American pastime. In West Chester, it's damn near an epidemic, according to a new analysis.

WalletHub, producer of endless city-ranking studies, has a new study published Tuesday that attempts to calculate how long it would take to pay off the average credit card debt in 2,537 cities.

West Chester had the longest average time needed to pay off its residents' average debt at a whopping 192 months, or 16 years. That's eight months longer than the two cities tied for the second-longest average payoff time: Ruston, Louisiana, and Stillwater, Oklahoma.

RELATED: Philadelphia has seventh-lowest credit card debt burden in U.S.

According to the study, the average credit card debt in the Chester County city is $6,926, and the estimated average cost to pay that off, including interest rates, is $10,535.

The study used October 2016 data from credit information company TransUnion to calculate average credit card debts and used 2015 census data to determine the median income in each city.

Source: Wallethub

Here's more on the study's methodology:

First, we assumed that individuals earning the national median income ($30,926) would be able to pay 3 percent of their initial credit-card balance every month. Based on that assumption, we calculated the percentage that the minimum credit-card payment (i.e. 3 percent of the balance) represents of the median income. We then used that percentage and the median income in each city to calculate the average monthly payment in a particular city.


Second, we assumed a 14 percent average interest rate based on the APR paid by existing cardholders, according to the average interest rate assessed on accounts with finance charges, as provided by the Federal Reserve's Consumer Credit report. We used that percentage to compute the cost of paying off a city’s credit-card balance.

Finally, we ranked the cities based on the calculator’s outputs for each city. A percentile rank of “99” corresponds with the city with the least sustainable credit-card debt — that is, the city with the longest payoff timeline and largest payoff cost.

West Chester, of course, ranked in the 99th percentile. To find out where your city ranks, check out the full study here.