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And the Debt Capital of America Is…

When people hear about the "debt crisis in Washington," they usually think about the federal government's habit of spending (much) more than it takes in. Turns out the individual citizens of Washington D.C. have similar bad habits.

Debt Snapshot of the Washington D.C. Metro Area

According to Experian's eighth annual State of Credit report, residents of the District and its surrounding area ranked second in the nation for total average debt in 2017, with a hefty $27,867.

D.C. citizens were also in the top five nationally for average credit card debt, with $7,442, 17% more than the national average of $6354. And, most spectacularly, mortgage debt in the region was a whopping $306,187, thanks especially to a couple of extremely wealthy counties within the MSA—or Metropolitan Statistical Area—of Washington D.C.

Credit Snapshot of D.C. Metro vs. National Averages
NationalD.C. Metro
Average VantageScore675685
Average Non-Mortgage Debt$24,706$27,867
Average Mortgage Debt$201,811$306,187
Average Number of Credit Cards3.13.19
Average Balance on Credit Cards$6,354$7,442
Average Number of Retail Cards2.52.39
Average Balance on Retail Cards$1,841$1,974

Real Estate Prices Driving Debt in D.C.

Some of the most valuable residential real estate in the nation is the driving force behind the high overall debt levels in the D.C. Metro compared to the rest of the nation.

Experian reported that nationwide, average mortgage debt swelled 3%, from $196,014 to $201,811, due to quickly rising housing prices. In comparison, the average mortgage balance in D.C. grew from $385,159 in 2016 to $406,035 in 2017, a 5.4% increase.

According to Experian's 2016 analysis of how much Americans owe on their mortgages in every state, residents of Washington D.C. had the highest average mortgage debt at $385,000, followed by California ($336K) and Hawaii ($331K). People in West Virginia owed the least on their homes, with an average mortgage debt of $113,000.

Cost of living in Washington D.C.

Bottom line, Washington D.C. is a very expensive place to live39% above the national average, according to Payscale.com. In addition to extremely expensive housing—including rents and mortgages—groceries and transportation costs are also well above the national average in the D.C. Metro area, contributing to the additional debt burden.

"Washington D.C. is a unique place in terms of the economics and the population," said Kelley Motley, Senior Director of Analytical Consulting for Experian.

Economics of Washington D.C.

As of November 2017, D.C.'s unemployment rate was an exceptionally low 3.7%, according to the Bureau of Labor Statistics.

It has a very highly educated population. The United States Census Bureau reported that 55.4% of Washington D.C. Metro area residents obtained a Bachelor's degree or higher.

But What About the Debt?

As with Uncle Sam, there's more to Washingtonians debt load than just the absolute numbers—especially when it comes to credit card debt.

Nearly 30% of consumers are categorized as "transactors" by the American Bankers Association, meaning they pay balances off at the end of the month. D.C. residents may just know how to make credit cards work for them by getting cash back or points for travel and other rewards.

Also, while the average amount of debt in Washington D.C. increased from 2016, so did the average VantageScore, up to 685. This is 10 points higher than the national average, and up from 684 in 2016.

What does this all this say about Washington D.C. taking on the dubious title of "debt capital" as well as the nation's capital? Debt is high, but delinquencies are not. A home is going to cost the average resident mightily, but more than half of residents are highly educated, which leads to higher salaries to pay those hefty mortgages. All said—the "debt capital" title sounds worse than it really is.


Editorial Disclaimer: Opinions expressed here are author's alone, not those of any bank, credit card issuer, or other company, and have not been reviewed, approved or otherwise endorsed by any of these entities. All information, including rates and fees, are accurate as of the date of publication.
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