As rising costs and economic uncertainty continue to squeeze American households, a new WalletHub study highlights a growing wave of financial distress in the country’s largest cities. The analysis, released on February 19, 2025, shows that urban residents are increasingly struggling to stay afloat, with some areas experiencing nearly 90% surges in people seeking payment relief from creditors. Southern cities, in particular, are bearing the brunt, with Houston, Atlanta, and Jacksonville topping the list of metros where financial hardship is most acute.
The WalletHub report evaluated 100 major U.S. cities using nine key indicators, such as credit scores, bankruptcy filings, and the percentage of accounts in forbearance or with deferred payments—markers of financial distress where lenders have granted temporary reprieve due to hardship. The findings reveal a stark divide, with Southern metros dominating the top ranks as residents grapple with mounting economic pressures.
Houston emerged as the most financially distressed city in the nation, scoring 76.44 out of 100. More than 9% of its population has accounts in distress, and the city ranks highest for Google searches related to “debt” and “loans,” signaling a desperate search for financial lifelines. Atlanta follows closely with a score of 76.24, driven by a staggering 36% increase in residents with distressed accounts from Q4 2023 to Q4 2024. The Georgia capital also ranks sixth for the average number of distressed accounts per person, suggesting that financial struggles often compound for its residents.
Jacksonville, Florida, takes third place with a score of 67.94 and leads the nation in several alarming metrics. Nearly 16% of its residents have accounts in distress—the highest share nationwide—while the city also tops the list for the most distressed accounts per person. Even more troubling, Jacksonville saw an 87% spike in the proportion of people with distressed accounts over the past year, the largest jump among all cities studied.
The South’s financial woes continue with Dallas (fourth, 67.79) and Charlotte, North Carolina (fifth, 66.65) rounding out the top five. Dallas stands out for its high bankruptcy filings, while Charlotte maintains relatively solid credit scores despite its distress ranking. Other Southern cities—Orlando (sixth), San Antonio (seventh), Tampa (eighth), Miami (ninth), and Austin (tenth)—complete the top ten, each grappling with unique challenges like poor credit scores (Miami) or rising bankruptcies (San Antonio and Austin).
At the opposite end of the spectrum, Anchorage, Alaska, emerged as the least financially distressed city, offering a rare bright spot in an otherwise sobering report. Analysts attribute the South’s heavy presence on the list to factors like lower median incomes, higher unemployment rates in some areas, and the lingering effects of inflation, which have stretched household budgets thin.
“Escaping the cycle of financial distress is a daunting task,” the study notes, emphasizing that temporary relief from lenders often comes at the cost of accumulating interest, deepening the debt trap. As economic pressures persist into 2025, cities like Houston and its Southern counterparts face an uphill battle to regain financial stability.