States with the Highest (and Lowest) Credit Card Debt

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Americans cut down their credit card debt by 11% last year, compared to 2010, according to a new report by Credit Karma. 24/7 Wall St. looked at the average credit card debt owed by the residents of each state to determine the five states with the most and the least debt as of December 2011.

Credit card debt is a measure of the economy, and some analysts are suggesting that the decrease in the debt is a positive sign. But not all agree. Ken Lin, CEO of Credit Karma, told CNNMoney that the drop in debt is the result of weak consumer confidence, resulting in slower spending, tighter lending on the part of banks and lower credit limits.

One of the driving factors for states whose residents owe the most in credit card debt is that they are wealthy states. Nine out of the 10 states with the most in credit card debt have among the highest median household incomes. Alternatively, six of the 10 states with the smallest amounts of credit card debt have among the lowest median incomes.

Other than high median income, many high-debt states also have high costs of living relative to other states. Seven of the 10 with the highest rates of debt are within the 15 states with the highest costs of living. When people must pay more for consumer goods, they often end up with larger amounts of debt. The opposite case is also true. States whose residents pay less for goods have less debt. Four of the 10 states with the lowest amounts of debt are within the 15 states with the lowest costs of living in the country.

Corresponding with wealth, many of the states with high levels of debt have above-average credit scores. In fact, six of the 10 states with the most debt are among the 15 states with the highest average credit scores. Six of the 10 with the least debt are among the 15 states with the lowest credit scores.