Posted by: Adam McCann

Americans are known for racking up credit-card debt, but just how much we have in total is shocking. At the beginning of 2019, Americans owed over $1 trillion in credit-card debt. And though we repaid $38.2 billion in the first quarter of the year, we’re projected to have a $70 billion net increase by the end of the year.

Americans aren’t all in the same boat when it comes to credit-card debt, though. People in some states are better than others when it comes to avoiding charging more than they can afford. To determine which states have the least and most sustainable credit-card debts, WalletHub drew upon TransUnion credit data to calculate the cost and time required to pay off the median card balances of each of the 50 states and the District of Columbia. Read on for the full findings, commentary from a panel of experts and a detailed description of our methodology.

1. Main Findings
2. Ask the Experts
3. Methodology

Main Findings Embed on your website<iframe src="//d2e70e9yced57e.cloudfront.net/wallethub/embed/63822/geochart-state-credit-card-debt.html" width="556" height="347" frameBorder="0" scrolling="no"></iframe> <div style="width:556px;font-size:12px;color:#888;">Source: <a href="https://ift.tt/2YEM59a>

 

States with the Highest & Lowest Credit-Card Debts

Rank*	State	Median Credit-Card Debt	Cost to Pay off	Months & Days Until Payoff
1	Alaska	$4,144	$575	19 months and 11 days
2	District of Columbia	$3,242	$404	17 months and 12 days
3	Vermont	$2,227	$247	15 months and 14 days
4	Washington	$2,880	$313	15 months and 3 days
5	Colorado	$2,985	$324	15 months and 3 days
6	Oregon	$2,641	$282	14 months and 29 days
7	Wyoming	$2,712	$290	14 months and 29 days
8	Virginia	$3,081	$327	14 months and 26 days
9	Montana	$2,579	$269	14 months and 17 days
10	New Mexico	$2,613	$268	14 months and 7 days
11	Kansas	$2,574	$264	14 months and 7 days
12	Texas	$2,860	$292	14 months and 4 days
13	Idaho	$2,426	$247	14 months and 4 days
14	North Dakota	$2,385	$236	13 months and 24 days
15	Georgia	$2,786	$274	13 months and 22 days
16	Utah	$2,508	$246	13 months and 20 days
17	Massachusetts	$2,459	$241	13 months and 19 days
18	California	$2,672	$261	13 months and 18 days
19	Arizona	$2,686	$262	13 months and 17 days
20	Minnesota	$2,510	$245	13 months and 17 days
21	Oklahoma	$2,628	$255	13 months and 15 days
22	North Carolina	$2,593	$251	13 months and 14 days
23	New Hampshire	$2,511	$242	13 months and 11 days
24	Nevada	$2,645	$254	13 months and 9 days
25	Maryland	$2,819	$270	13 months and 8 days
26	Tennessee	$2,544	$243	13 months and 8 days
27	Michigan	$2,343	$224	13 months and 7 days
28	South Carolina	$2,579	$245	13 months and 4 days
29	Maine	$2,265	$214	13 months and 2 days
30	Connecticut	$2,755	$260	13 months
31	Wisconsin	$2,120	$197	12 months and 29 days
32	Missouri	$2,460	$228	12 months and 29 days
33	Florida	$2,603	$239	12 months and 22 days
34	New York	$2,600	$238	12 months and 22 days
35	Louisiana	$2,600	$237	12 months and 19 days
36	New Jersey	$2,701	$246	12 months and 19 days
37	Illinois	$2,665	$241	12 months and 17 days
38	Rhode Island	$2,392	$216	12 months and 15 days
39	Iowa	$2,091	$188	12 months and 14 days
40	West Virginia	$2,331	$210	12 months and 14 days
41	Nebraska	$2,302	$207	12 months and 13 days
42	Ohio	$2,325	$207	12 months and 9 days
43	Arkansas	$2,353	$202	11 months and 29 days
44	Hawaii	$2,868	$246	11 months and 28 days
45	South Dakota	$2,449	$209	11 months and 25 days
46	Delaware	$2,515	$213	11 months and 23 days
47	Pennsylvania	$2,344	$198	11 months and 21 days
48	Alabama	$2,451	$206	11 months and 19 days
49	Kentucky	$2,248	$187	11 months and 14 days
50	Mississippi	$2,258	$170	10 months and 9 days
51	Indiana	$2,313	$167	9 months and 29 days

*1 = Least Sustainable Credit-Card Debt

 

 

Ask the Experts

With record-setting projections for credit-card debt in 2019, we asked a panel of credit experts to shed light on the unsustainable credit behavior that leads to such negative results and their effects on the economy. Click on the experts’ profiles to read their bios and thoughts on the following key questions:

1. What daily behaviors lead people to amass credit-card debt?
2. What are the key situations when going into debt is worth it?
3. What are three easy steps a person should take in order to become debt-free?
4. What role, if any, should government play in incentivizing and encouraging people to maintain low debt-to-income ratios (e.g., through tax incentives)?

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• Debra Z. Blatz Ph.D. – Professor, Marketing and Entrepreneurship, The Bill Munday School of Business, St. Edwards University
• Jennifer Brodmann Ph.D. – Assistant Professor of Finance, Department of Accounting, Finance, and Economics, California State University Dominguez Hills
• Brandon Ware Associate Professor, Business, Biola University, Crowell School of Business

Methodology

In order to determine the states with the most and least sustainable credit-card debts, we first looked at the median credit-card balances and credit card payments of residents in each of 50 states and the District of Columbia as of September 2018, based on TransUnion data. Our analysis includes credit cards that carried a balance and excludes store cards.

Using the median credit-card balance and monthly credit card payment of residents in each state, we determined the required number of months to pay off that balance and the resulting finance charges. In order to do so, we made the following assumption:

• Consumers would pay an average 16.91 percent interest rate, based on the APR paid by existing cardholders, according to the average interest rate assessed on accounts with finance charges. Using that percentage, we computed the cost of paying off the state’s median credit-card balance.

Finally, we ranked the states based on the calculator’s outputs. Rank 1 corresponds with the state with the least sustainable credit-card debt — that is, the state with the longest payoff timeline.

 

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Sources: Data used to create this ranking were collected from the U.S. Census Bureau, Federal Reserve and TransUnion.

Image: Rawpixel.com / Shutterstock.com

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