Alaska ranks first on this year’s unpopular list and is the state with the most credit card debt according to a 2023 survey. wallet hub research.
But with a median credit card debt of $3,517, the state is not alone. Studies show that many states are not far behind. These include the District of Columbia ($3,290), which has the second highest credit card debt, followed by Colorado ($3,106), New Hampshire ($2,793) and Vermont ($2,515).
The states with the lowest credit card debt are West Virginia ($2,131), Mississippi ($2,304), Kentucky ($2,230), Pennsylvania ($2,439), and Iowa ($2,077).
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Last year, Americans increased their credit card debt by a record $179.4 billion, taking the total to more than $1.1 trillion, according to the study.
To determine each state’s debt, WalletHub used TransUnion data to examine the median credit card balances and credit card spending for residents of each of the 50 states and the District of Columbia as of April 2023. bottom. The analysis also included excluded cards with a balance. Store your credit card. Then, assuming an average interest rate of 20.92%, we determined the number of months it would take to repay that balance and the resulting financial fees.
As a result, Alaska came in first, the state with the lowest sustainable credit card debt or the longest repayment schedule.
Many Factors Cause Debt
While it might be reasonable to assume that people with lower incomes have more credit card debt, the opposite is often true, according to one expert. US Chamber of Commerce The report ranks Alaska and Virginia as the states with the highest credit card debt.
“Credit card debt is the result of many factors,” the chamber said in its report. These include cost of living, availability of affordable housing, state economy, employment rates, access to financial education, and more.
WalletHub has reached out to several experts for comment on credit card debt, including Doris Perryman, Adjunct Associate Professor of Accounting at Bristol Community College.
Perryman said making unnecessary purchases is a major cause of accumulating large amounts of credit card debt. Another factor is paying the minimum amount on a high-interest credit card, which doesn’t reduce the card balance, he said.
According to Paul Oberman, an assistant professor of finance at Idaho State University, a simple step to becoming debt free is knowing exactly how much debt you have across all your credit cards and other loans. It says. Other steps include accurately knowing your future debt and planning and budgeting to avoid additional debt.
“Any attempt to go debt-free should be avoided in any attempt to become debt-free, as it may require budget revisions if additional debt arises,” he added.
