US city with the most people in financial distress revealed. Find out if it's yours

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Chicago has earned an unfortunate distinction: It now ranks as the most financially distressed major city in the U.S., according to a new study by WalletHub (1).

In the study, which was published in February 2026, Chicago scored highest on its financial distress index, with 77.74 out of 100 — driven by a nearly 30% year-over-year jump in residents with distressed credit accounts and a staggering 127% surge in the average number of distressed accounts per person.

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“On top of that, it ranks first in Google Search interest for both ‘debt’ and ‘loans,’ signaling heightened demand for borrowing,” WalletHub analyst Chip Lupo said to Newsweek (2).

While Chicago sits at the top of 100 major U.S. cities, the broader story is a national one. For instance, Americans held $1.28 trillion in credit card balances as of late 2025, according to the Federal Reserve Bank of New York (3).

Millions of Americans are juggling rising costs, high interest rates and growing debt balances, a combination that can quickly spiral into missed payments, collections or long-term credit damage if left unchecked.

It’s a sign of how quickly household finances can buckle under the pressure of debt, inflation and economic uncertainty.

Here are the 5 cities under the most pressure

Chicago isn’t alone in facing mounting financial strain. WalletHub identified Houston as the second-most distressed major city, followed by Las Vegas, Dallas and Los Angeles to round out the top five.

Financial distress, as defined in the report, includes credit accounts in forbearance, deferred payment status or otherwise showing signs of trouble. These indicators can signal broader economic stress, especially when they rise rapidly across a population.

When credit accounts enter distress, the consequences can snowball. Credit scores often drop, which can trigger higher interest rates on existing balances or make refinancing difficult. Borrowing options can narrow, leaving households with fewer tools to manage emergencies.

Credit card interest rates now average nearly 24%, according to LendingTree (4), meaning carrying balances can become increasingly expensive. Minimum payments alone often barely cover interest, extending repayment timelines and increasing total costs.

Financial strain can also creep into everyday life — from delayed major purchases to difficulty qualifying for housing or affordable insurance. In severe cases, households may face collections, lawsuits or bankruptcy.

Even so, financial setbacks aren’t permanent. Negative marks such as late payments, charge-offs or collections eventually age off credit reports, and consistent on-time payments can gradually rebuild credit profiles.

How to dig out of a debt nightmare

If you’re feeling this pressure, experts recommend focusing first on stabilizing the situation. That starts with creating a full inventory of debts — balances, interest rates and minimum payments — to understand the scope of the problem.

Repay strategically

Debt repayment strategies can help restore momentum. The snowball method, which targets the smallest balances first, can create early wins that build motivation. Others prefer the avalanche approach, which prioritizes the highest interest rates to minimize long-term costs.

Balance transfer credit cards offering temporary 0% APR can provide breathing room if used carefully, while debt management plans through nonprofit credit counselors can help you to lower interest rates and consolidate payments into a structured plan.

However, consistent, on-time payments remain the single most powerful tool for credit recovery, notes Experian (5). Over time, payment history can outweigh past mistakes and open doors to better borrowing terms.

Consolidate your debt

One way to speed up your debt payoff plan is by consolidating your balances into a personal loan through Credible. It consolidates several monthly payments into a single fixed payment, making repayment much simpler.

Through Credible’s online marketplace, finding the right loan becomes much simpler. Credible lets you comparison-shop for the lowest interest rates with just a few clicks. In less than three minutes, you’ll see all the lenders willing to help pay off your credit cards or other debts with a single personal loan.

And if you owe a substantial amount, you may also want to see if you qualify for a debt relief program to help clear a significant portion of your debt.

With Freedom Debt Relief, you can speak with a certified debt relief consultant for free, who can show you how much you can save by partnering with them.

If you’re eligible, they can negotiate settlements with your creditors until all of your enrolled debt is resolved.

How to stay out of debt

Climbing out of debt can feel like crossing the finish line, but the real goal is making sure you don’t end up back where you started. Once you’ve cleared your balances, the next step is rebuilding your finances so you’re less likely to fall back on credit when unexpected expenses pop up.

One way to do that is by paying yourself first. That means automatically setting aside a portion of every paycheck before that money gets absorbed into everyday spending. Consistent contributions can gradually build a financial cushion that keeps you from relying on credit cards.

Invest your spare change

It’s also important to remember that you don’t have to set aside huge amounts every month in order to create a financial buffer. Even spare change from everyday purchases adds up over time, thanks to the powers of compounding interest.

And platforms like Acorns make it easier than ever by automatically investing your spare change from everyday purchases into ETFs — helping you stay consistent without having to think about it.

Getting started is simple: All you have to do is link your cards, and Acorns will round up each purchase to the nearest dollar, investing the difference — your spare change — into a diversified portfolio managed by experts at leading investment firms like Vanguard and BlackRock.

With Acorns, you can invest in diversified ETFs that match your financial needs and risk tolerance with as little as $5. Even better, if you sign up today, Acorns will add a $20 bonus.

Shop around for car insurance

Another smart move is finding ways to cut your budget where you can. Even modest reductions in recurring expenses can free up cash to boost savings or investments, helping you stay on solid financial ground without turning back to credit.

A good place to start is with the bills that quietly chip away at your income each month. Many of them rise gradually over time, so you might not notice the impact right away. Car insurance, for example, has jumped by about 55% since 2020 (6) — and The Zebra expects rates to jump during the first half of 2026 in 19 states across the country (7).

The silver lining is that those increases are happening nationwide. In many cases, they’re driven by higher repair costs and inflation rather than anything related to your driving. That means shopping around for a new policy could help bring that monthly premium back down.

By using a comparison platform like Insurify, you can instantly view quotes from top-rated providers to ensure you aren’t paying a hidden “loyalty tax” to your current insurer.

Just answer a few basic questions, and Insurify will show you the most affordable deals in as little as three minutes.

Not only is the process 100% free, but you could also save up to 15% by bundling your car and home insurance.

— With files from Chris Clark

US city with the most people in financial distress revealed. Find out if it’s yours — and how you can dig out of debt