OGDEN, Utah- The Chief Credit Analyst for Lending Tree reported Ogden credit card debt has the highest percentage of debt out of 100 cities studied.
Matt Schulz says due to the business shutdowns, government stimulus checks, and unemployment insurance, Americans were able to pay down some of their debt. “Believe me that is not something that happens during an economic crisis… usually things go the other way. But the impact of the government stimulus and unemployment benefits have really changed things.”
Schulz study of credit card balances of people in 100 American cities shows a drop in the first few months of the pandemic. From February to May, their balances fell from an average of $7057 to $6588. People were able to get rid of 459 bucks of debt, on average. That’s a percentage change of -6.6%. The numbers get even more exaggerated in cities along the Wasatch Front.
“Big drops in Provo and Salt Lake City. [Both cities] saw their balances drop by about 10% or more, ” says Schulz. Salt Lake City saw the 17th biggest savings in the study, with a drop of $612 in card debt, or -9.7%. Provo is ranked 8 with a drop of $692, or a whopping -12.10%. Schulz isn’t surprised about this Provo and SLC. “Utah and the western US tends to do a pretty good job in handling their credit card bills.”
That’s what makes voice rise a bit when he talks about the outlier: Ogden, UT. “[Odgen] had the biggest increase [in credit card debt] in the hundred cities that we looked at. Credit card balances [there] grew 3.4%, they ADDED to their debt by $185.” And Schulz doesn’t know exactly why Ogden credit card debt is higher, either.
He offers one explanation. “Perhaps businesses in [Ogden] were less impacted by the virus than cities like Salt Lake… and thus [people] used their stimulus check to spend.”
Another view is from Utahn Scott Schaefer, Professor of Finance at the University of Utah. He knows that the state shut down as a whole in March, and restrictions were universal across Utah. But he can’t definitively say, either.
“One hypothesis I have is that Weber county is the poorest of the big four Wasatch Front counties. Davis, Utah, and Salt Lake all have a higher median income than Weber.” Also, Schaefer posits it may have something to do with the unemployment bonus.
“There are studies out there showing that the extra $600 per week in unemployment benefits seem to have reduced poverty nationally, but you have to be on unemployment to get that. Weber County’s unemployment rate is already back down to 5.2% from a pre-COVID level of around 3%, so there aren’t many people in Weber county pulling in the $600 per week, at least not compared to national averages.”