Southern States Struggle the Most With Credit Card Debt

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Americans are increasingly using plastic over cash in the checkout aisle. According to the Federal Reserve, Americans have a record $1.04 trillion in credit card debt. The temptation to buy now and pay later with a credit card is powerful — and while many pay off their balances every month, those who do not often face serious financial consequences.

According to Ted Rossman, industry analyst at research group creditcards.com, about 40% of Americans have enough income to pay off their credit card balance and do so in full every month. For them, a high credit card balance is not a problem.

For the remaining 60%, however, maintaining a high credit card balance can mean hundreds of dollars in interest payments a year and a poor credit score.

Americans owe $8,195, on average, on both retail- and bank-issued credit cards. When it comes to debts this high, borrowers should pay as much as they can afford every month. According to Rossman, a good benchmark to shoot for is using 15% of gross income to pay down credit card debt. “If you’re only making minimum payments on these kinds of debts, you’re going to be in debt for a really long time,” Rossman said.

The average credit card debt varies by state, but it does not tell the whole story. The ability to pay off outstanding credit card balances also depends on income. In wealthier states, a credit card payment equal to 15% of median monthly income is going to be higher than in poorer states — and go farther in reducing debt.

Using that 15% benchmark against median household income in the state, as well as considering the average credit card debt in that state and assuming a middle-of-the-road 20.8% interest rate, the time it would take to pay down the average credit card debt varies considerably by state, as do the total interest payments. 24/7 Wall St. used data provided by creditcards.com to identify the states with the highest credit card burden — as measured by the amount of time it would take to pay off the average state debt.

States with the lowest credit card burdens do not necessarily have the least credit card debt but they are typically wealthier, with relatively high median household income. The states with the greatest credit card burdens are concentrated in the South and tend to be relatively poor. In some states, 15% of median income is enough to pay off debts of nearly $8,000 in just nine months. In others, a similar amount of debt can take nearly a year and a half to pay down.

In the table, states are ranked by the number of months it would take to pay down the average credit card debt by making payments equal to 15% of the state’s median monthly income. Ties are broken by estimated interest payments.

Geography: Avg. balance: Median income: Months to pay off: Interest to pay off: Avg. credit score:
United States $8,195 $60,336 13 $964 675
1. New Mexico $8,323 $46,744 17 $1,320 659
2. Louisiana $8,110 $46,145 17 $1,267 650
3. West Virginia $7,563 $43,469 17 $1,167 658
4. Alabama $7,967 $48,123 16 $1,163 654
5. Arkansas $7,727 $45,869 16 $1,151 657
6. Mississippi $7,433 $43,529 16 $1,124 647
7. Georgia $8,738 $56,183 15 $1,190 654
8. Oklahoma $8,197 $50,051 15 $1,181 656
9. Florida $8,363 $52,594 15 $1,168 668
10. South Carolina $8,124 $50,570 15 $1,147 657
11. Tennessee $7,996 $51,340 15 $1,091 662
12. Alaska $10,685 $73,181 14 $1,358 668
13. Texas $9,100 $59,206 14 $1,223 656
14. North Carolina $8,062 $52,752 14 $1,077 666
15. Arizona $8,265 $56,581 14 $1,051 669
16. Kentucky $7,428 $48,375 14 $997 663
17. Nevada $8,250 $58,003 13 $1,020 655
18. Kansas $7,964 $56,422 13 $977 680
19. Missouri $7,706 $53,578 13 $963 675
20. Wyoming $8,199 $60,434 13 $963 678
21. Ohio $7,654 $54,021 13 $942 678
22. Idaho $7,518 $52,225 13 $941 681
23. Montana $7,444 $53,386 13 $901 689
24. Indiana $7,393 $54,181 13 $874 667
25. Michigan $7,382 $54,909 13 $858 677
26. Virginia $9,120 $71,535 12 $1,004 680
27. New York $8,510 $64,894 12 $965 688
28. Delaware $8,255 $62,852 12 $938 672
29. Illinois $8,168 $62,992 12 $916 683
30. Pennsylvania $7,888 $59,195 12 $909 687
31. Rhode Island $8,162 $63,870 12 $901 687
32. Maine $7,466 $56,277 12 $857 689
33. Vermont $7,466 $57,513 12 $838 702
34. Oregon $7,582 $60,212 12 $824 688
35. Nebraska $7,515 $59,970 12 $812 695
36. South Dakota $7,199 $56,521 12 $792 700
37. Connecticut $9,000 $74,168 11 $941 690
38. Colorado $8,463 $69,117 11 $893 688
39. Washington $8,318 $70,979 11 $839 693
40. North Dakota $7,068 $61,843 11 $694 697
41. Iowa $6,726 $58,570 11 $664 695
42. Maryland $9,009 $80,776 10 $864 672
43. New Jersey $8,959 $80,088 10 $862 686
44. New Hampshire $8,252 $73,381 10 $798 701
45. California $8,144 $71,805 10 $794 680
46. Hawaii $8,423 $77,765 10 $785 693
47. Utah $7,727 $68,358 10 $751 683
48. Minnesota $7,351 $68,388 10 $680 709
49. Wisconsin $6,737 $59,305 10 $657 696
50. Massachusetts $7,994 $77,385 9 $708 699

Methodology:

Average credit card debt per person by state data comes from creditcards.com and represents the sum of average bank card debt and average retail card debt. Credit card debt burden was determined by calculating how long it would take to pay down the average credit card debt in the state by paying 15% of the state’s median monthly income and assuming a 20.8% interest rate — the national median. Data on credit card debt burden was provided by creditcards.com. Median household income came from the U.S. Census Bureau.

Average credit score figures are as of 2017 and come from credit research group Experian. Credit scores are based on VantageScore, and range between 501 and 990. Scores below 630 are deemed poor, and scores above 720 are considered excellent.