Credit card debt in the United States is on the rise: It hit $807 billion in the first quarter of 2019, a 29% increase over 2015, according to Experian. Credit cards are also becoming an increasingly popular form of payment — 60.5% of U.S. adults own a credit card, up 11% from the same time period in 2016. Let’s take a look at how each state ranks in terms of average credit card debt.
The trend is one that’s likely here to stay for awhile, says Christopher Viale, president and CEO of Cambridge Credit Counseling Corp. “Debt has been increasing as more people carry over a balance month to month,” he says. From the first quarter of 2018 to the first quarter of 2019, credit card debt was up by 6%.
The typical American has $6,028 in credit card debt, but that amount can vary dramatically depending on where they live.
Highest and lowest average credit card debt per state
According to Experian’s A Look at U.S. Consumer Credit Card Debt report, the states with the highest credit card debt include Alaska ($7,726), New Jersey ($6,881), Connecticut ($6,876), Virginia ($6,773) and Maryland ($6,750). On the opposite end of the spectrum, Iowa ($4,622), Wisconsin ($4,810), Kentucky ($5,017), South Dakota ($5,023), and Idaho ($5,027) make up the five states with the lowest credit debt. (You can see the full list of credit card debt by state near the bottom of this article).
The highs and lows of credit card debt tend to follow regional patterns. For example, the Midwest stands out for its low credit card debts. The 12 Midwestern states (Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota and Wisconsin) only have an average debt of $5,421 between them.
Contrast that with the 14 East Coast states (Connecticut, Delaware, Florida, Georgia, Massachusetts, Maine, Maryland, North Carolina, New Hampshire, New Jersey, New York, Rhode Island, South Carolina, and Vermont), which have $6,250 in credit card debt, or 15% more than in the Midwest.
What causes these regional variations? Factors such as cost of living, housing affordability, local employment rates, and state-specific tax rates and economic conditions can all play a role in how often someone puts a purchase on plastic. And while it might seem logical to assume that credit card users with lower incomes would rely more heavily on their credit cards for purchasing power, that doesn’t tend to be the case.
Higher income equals more debt
The states with the highest credit card debt are also some of those with the highest incomes. At $78,000, Maryland has the highest median household income in the U.S. based on the latest Census Bureau estimates, while also boasting the fifth highest credit card debt. Similarly, Alaska has the third highest median income, at $76,114, and the highest credit card debt. Mississippi, on the other hand, has the lowest median household income, at just $42,009, and a relatively low average credit card debt of $5,030.
So why do people with higher incomes rely so heavily on credit cards? Part of it could have to do with cost of living, which tends to be higher in each state where people make more money. Additionally, those with higher incomes could be qualifying for higher credit limits, allowing them to rack up more debt before paying it off, Viale says.
Big city spending
Some cities with particularly high credit card debt may have a hand in pushing up their home states’ averages. Experian found that out of 270 U.S. metro areas, the ones with the highest credit card debt in the first quarter of 2019 included Bridgeport-Stamford-Norwalk, Connecticut ($8,358); followed by Anchorage and Fairbanks, Alaska ($7,937 and $7,711, respectively); Virginia Beach-Norfolk-Newport News, Virginia-North Carolina ($7,444); and rounded out by Washington-Arlington-Alexandria, Washington, D.C.-Virginia-Maryland-West Virginia ($7,384).
Big city spending could partly explain the particularly high credit card debts in states like Connecticut and Virginia. Alaska may have a different motive — each Alaskan receives an annual Permanent Fund Dividend from the local oil industry (in 2018 it was $1,600), which may give them the financial confidence to put a bit more on their charge cards.
How each state stacks up
Each state’s average credit card debt can help tell the story of that area’s financial trends, from the cost of living to wages and spending power. See how your credit card habits stack up against fellow Americans across the country:
New Hampshire: $6,083
New Jersey: $6,881
New Mexico: $5,737
New York: $6,317
North Carolina: $5,698
North Dakota: $5,074
Rhode Island: $6,030
South Carolina: $5,821
South Dakota: $5,023
West Virginia: $5,043
Credit card debt dos and don’ts
Rising national credit card debt doesn’t always have to be a negative thing — it can signify consumer confidence, for example. Spending power is, after all, partially what credit cards are for, and using a credit card can have advantages such as cash back or airline rewards. However, racking up credit card debt does begin to be a problem when it’s not paid off in a timely manner. Of U.S. adults with a credit card, only about half tend to pay off their bills completely each month, leaving the other half with a balance some or most of the time.
Even if you commit to making more than just the minimum monthly payment, any balance left on your account at the end of a billing cycle begins to accrue interest, which tends to be about 15% on average across credit cards. This is a steep price to pay, especially if paying off the card is within your power.
The best practice is to pay your entire credit card bill each month, or at least as much as you can afford, and to try to keep your card expenditures within your budget.
How Resolve can help
If you have too much credit card debt, Resolve can help. While many traditional settlement companies don’t prioritize what’s best for consumers, Resolve takes a different approach: We want to help you find the best options for relieving the stress of your debt. The Resolve platform and access to debt experts is free. When professional help is needed, you can work with a service provider in the Resolve Network. These partners charge fees significantly lower than those charged by settlement companies (our partners charge 15% of whatever they save you).
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