Southern states most burdened by credit card debt: Study

Average Credit Card Debt in America: 2021

Southern states most burdened by credit card debt: Study

Editorial Note: The content of this article is the author’s opinions and recommendations alone. It may not have been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through a credit card issuer partnership.

Our researchers found the median debt per American family to be $2,700, while the average debt stands at $6,270.

The average balance for consumers is $5,315, although some of that debt may be held on joint cards and thus double-counted.

Overall, Americans owe $807 billion across almost 506 million card accounts. Below, you'll find some of the most prominent trends that emerged.

American credit card debt statistics and key findings

  • Average American family credit card debt: $6,270
  • Total outstanding U.S. consumer debt: $4.2 trillion
  • Total credit card debt: $807 billion
  • 45.4% of families carry some sort of credit card debt.
  • Families with the lowest quartile of net worth (median net worth of $310) hold an average of $4,830 in credit card debt, although only 44% have card debt.
  • The West holds the highest average credit card debt, averaging over $7,000.

The average credit card debt of U.S. families is $6,270, according to the most recent data from the Federal Reserve’s Survey of Consumer Finances.

This information comes from data collected through 2019, representing the most reliable measure of credit card indebtedness in the U.S.

American consumer debt (billions)

2003$693$7,5559.2%
2004$706$8,8338.0%
2005$732$9,7927.5%
2006$754$11,1116.8%
2007$817$12,1336.7%
2008$858$12,6756.8%
2009$812$12,2796.6%
2010$731$11,8446.2%
2011$693$11,6615.9%
2012$674$11,3106.0%
2013$672$11,2806.0%
2014$680$11,7105.8%

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Average credit card debt by state

How to Pay Down Credit Card Debt

Average credit card debt varied widely by state. The typical borrower in Alaska carries the most credit card debt — $6,617 on average. This is 10% more than Connecticut, which carries the next highest average credit card debt.

The average borrower in Iowa holds just $4,289 in credit card debt, which is the least of any state. Wisconsin and Kentucky were among other states that had the lowest average credit card debt.

29Alabama$5,047
1Alaska$6,617
22Arizona$5,157
37Arkansas$4,791
26California$5,120
11Colorado$5,541
2Connecticut$6,040
12Delaware$5,462
8District of Columbia$5,671
9Florida$5,623
7Georgia$5,693
10Hawaii$5,614

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Average credit card debt by age

Median credit card debt peaks for those who are between 45 and 54 years old, at $3,200.

Younger than 35$1,900$3,66047.6%
35-44$2,700$5,99050.5%
45-54$3,200$7,67051.7%
55-64$3,000$6,88046.6%
65-74$2,850$7,03041.1%
75 or older$2,700$8,08028.0%

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Average credit card debt by income

The greater the household income, the higher the credit card debt. Individuals in the highest annual income percentile, 90th to 100th, had an average of $12,600 in credit card debt — more than three times as much as households making the least.

Less than 20$16,29030.5%$3,830
20-39.9$35,63045.6%$4,650
40-59.9$59,05055.0%$4,910
60-79.9$95,70056.8%$6,990
80-89.9$151,70045.9%$9,780
90-100$290,16032.2%$12,600

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Average credit card debt by education level

People with college degrees carry higher credit card balances, even though only 43% carry credit card debt, compared with 52% who have some college and 47% who ended their education after high school.

Average credit card debt by race

People who identified as white (with no Hispanic origin) reported their families carried an average of $6,940 in credit debt — the highest amount of any racial group.

They were followed by “other” — which includes Asians, American Indians and people who identify as multi-racial — with an average credit card debt of $6,320. Black households carried the least debt with an average of $3,940, which is 37% lower than the nationwide average.

How the COVID-19 crisis changed credit card debt in America

The average debt for individual consumers dropped from $6,194 in 2019 to $5,315 in 2020. In fact, the average balance declined in every state.

Following years of growth, both outstanding credit card debt and credit limits from issuers dropped in 2020 amid the coronavirus crisis. The balance decreases have generally been attributed to drop-offs in spending during quarantine periods and the ability to pay down balances with economic impact payments and supplemental unemployment money.

Banks decreased card limits for 34% of consumers at the start of the crisis, according to CompareCards, as a way to mitigate potential losses in uncertain economic times.

Sources

Источник: https://www.valuepenguin.com/average-credit-card-debt

State debt burden survey 2020

Southern states most burdened by credit card debt: Study

There’s no doubt 2020 has put us through the wringer: We’ve faced a pandemic that brought a big recession and record U.S. unemployment.

But there’s a sliver of good news: Credit card debt is down.

The national average card debt fell 6% and the median household income rose 6% compared with last year, a new CreditCards.com survey found. The State of Debt survey looks at debt and income across the country to see which states carry the heftiest – and lightest – debt loads.

This year, Louisiana takes the No. 1 spot for biggest debt load, up from No. 2 last year. And Mississippi comes in second this year, up from fifth place last year. As in 2019, southern states are shouldering the most onerous debt burdens. In fact, 13 of the 14 states with the highest debt burdens are in the region defined by the U.S. Census as the South.

At the bottom of the list, Massachusetts has the smallest credit card debt burden for the third year in a row, while Washington, D.C. boasts the second-lowest debt load.

To determine debt load, CreditCards.com looked at the average card debt owed, data from Experian, as well as median household income in each state. We then calculated how long it would take to get debt in each state by paying 15% of gross monthly income toward card balances. (See methodology.)

But no matter which state you call home, you might have a tougher time getting debt this year. That’s because two of the most popular debt payoff tools, balance transfers and personal loans, have become much harder to obtain over the past year, says CreditCards.com industry analyst Ted Rossman.

“Right now, getting credit card debt is mostly on you,” he says.

See related: 3 best strategies for paying off credit card debt

Higher earnings mean lighter debt load in many states

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One of the biggest factors affecting a state’s rankings for debt load: the median income. It’s simply faster and easier to get debt when you have more money flowing into your bank account.

A prime example: the state with the lightest debt burden, Massachusetts, also has the third-highest median household income in the country. And the place with the second lowest debt load, Washington, D.C., has the highest median household income at $92,266 a year.

In contrast, the states with the heaviest debt burdens all rank in the bottom 10 in terms of median household income. Here are the five states with the biggest debt loads in 2020:

  1. Louisiana – up from second place last year with an income rank of 48th
  2. Mississippi – up from the fifth spot last year and in last place (51st) for income
  3. Oklahoma – up from sixth place last year and 44th in income rankings
  4. Alabama – up from the eighth spot last year and 47th for income
  5. Arkansas – down from fourth place last year and 49th in terms of income

Texas and Georgia both rose up the list to join the top 10 states with the heaviest debt burdens this year, while Florida fell to number 11, down from seventh place last year.

Just as we’ve seen in past years, all states with high debt loads have middling credit card balances paired with lower median incomes that add to the challenge – and extend the timeline – for paying down debt.

But Wisconsin and Minnesota stand out among the states with the lightest debt loads because they have middle-of-the-pack incomes but very low card balances. In fact, Wisconsin is No. 22 in terms of income but lowest (51st) in terms of card debt owed. So, low debt is the primary reason that state fared so well in the debt burden ranking.

Other states in the bottom five are Minnesota at fourth-lowest debt load, down from third-lowest last year, and Utah at fifth lowest, dropping from fourth lowest last year. California, New Jersey and Washington are other big states among the 10 lowest debt burdens.

Overall, the credit card share of total debt outstanding has fallen fairly significantly since the pandemic started, says Scott Hoyt, senior director at Moody’s Analytics.

“Borrowing has fallen fairly significantly. But it’s hard to tell from the data we have how much the decline is from repayment and how much it’s just from people not borrowing because they’re not spending,” he says.

Highest credit card debt burden states

2020 rankStateTotal credit card balanceMedian annual household incomeMonths to pay offTotal interest paid
1Louisiana$7,940$51,07315$1,013
2Mississippi$7,367$45,79215$977
3Oklahoma$8,094$54,44914$984
4Alabama$7,803$51,73414$964
5Arkansas$7,571$48,95214$960

A silver lining: Help is available in a crisis

One of the most noteworthy findings in this year’s poll is that the crisis didn’t cause consumers overall to fall further into debt. In fact, the average credit card debt actually went down.

This bit of good news can be attributed partly due to stimulus payments, the extra $600 a week in unemployment benefits (which expired at the end of July) and other relief from the U.S. federal government, along with a proactive approach by creditors, says Michael Bovee, debt expert and founder of the Consumer Recovery Network.

Most major credit card issuers responded quickly to the pandemic and the ensuing rise in U.S. unemployment by offering COVID-19 credit card debt relief. For example, American Express offered hardship relief for as long as 60 months. And Capital One offered to defer payments and waive fees for some cardholders.

Consumers also were able to get deferrals on auto loans and mortgages, Bovee points out. In fact, some deferred these loan payments and used the extra money that freed up to pay down debt, he says.

This approach from the government and lenders has created a vastly different experience from past recessions the 2008 Great Recession led by the subprime mortgage crisis, Bovee points out. Consumers had more help this time around.

“As an example, somebody in Louisiana or Mississippi may have found that extra unemployment helped them to pay their expenses, not fall behind and even pay their debt down as a result of some of that extra money,” Bovee says.

See related: 10 tips for handling your credit during the COVID crisis

Lowest credit card debt burden states

2020 rankStateTotal credit card balanceMedian annual household incomeMonths to pay offTotal interest paid
47Utah$7,482$75,7809$599
48Minnesota$7,114$74,5939$550
49Wisconsin$6,504$64,1689$534
50Washington, D.C.$8,227$92,2668$596
51Massachusetts$7,506$85,8438$534

How to get debt in a crisis

Getting debt in 2020 with a pandemic and economic crisis still raging may be harder than normal, but there is help available. Here are six tips for getting control of your debt no matter where you live:

1. Make an aggressive repayment plan

Pay a lot more than the minimum required payment if at all possible.

“If you make your state’s median household income and are able to buckle down and put 15% of your income toward your credit card debt, your debt will be completely gone within eight to 15 months, Rossman points out. “That’s powerful motivation.”

2. Put cash you’re not spending toward debt

While some households are spending more on groceries and other items during the pandemic, average weekly household spending on credit cards fell by an average of 40% by the end of March 2020, according to research from JPMorgan Chase.

This decrease was more due to pandemic behavior changes than income loss, according to Chase. If you spent a certain amount on restaurants or travel before the pandemic, consider funneling some of that, if you’re able, to debt repayment.

3. Reap your unused rewards

Do you have a rewards credit card? If you’re sitting on a pile of unused points, consider turning them into cash back and putting them toward debt repayment. While not normally considered the wisest use of points and miles, these are not normal times.

“It might make sense to turn your rewards into cash in an environment where you’re not going to be able to take that trip you planned,” Bovee says.

4. Consider putting windfalls toward debt

No one knows yet if or when Congress will pass legislation to give Americans a second stimulus payment, or for how much.

But it’s worth considering putting future windfalls such as any additional stimulus payments toward debt or socking them into savings to cushion you from future financial emergencies that you’d otherwise put on a card, if you don’t have enough in the bank.

5. Ask your creditors for help

Major credit card issuers and other lenders are offering programs to help consumers who are struggling due to the pandemic and related job loss. These may include deferred or lowered payments, reduced interest rates and waived late fees.

First, call your card issuer to request financial assistance. Some issuers may ask you to file a request via an app or online due to longer wait times, according to the CFPB.

“Take advantage of every single opportunity that you have to defer a loan when it makes sense for your situation,” Bovee says.

6. Sign up for credit counseling

You can also turn to a nonprofit credit counseling agency. These organizations offer debt management programs that can help you get lower interest rates and better payment terms from your creditors. Nearly all agencies offer phone and virtual credit counseling, a huge benefit in a pandemic.

“I typically suggest people talk to a nonprofit credit counseling agency if they’re running money before they run month,” Bovee says.

See related: What is credit counseling, and how can it help you? 

COVID relief programs may stick around post-crisis

One good thing to come this crisis: Bovee predicts lenders will continue to use programs they introduced during the pandemic to help consumers who need help in the future.

“If two years from now the pandemic is over and a pocket of job loss happens in North Dakota, you’re in a situation now where banks have used these tools,” he says. “And I think that they’ll carry forward.”

Survey methodology

CreditCards.com calculated payoff times and interest charges using the average credit card debt per bank and retail cardholder (according to Experian) and the median household income (courtesy of the U.S. Census) in each state. CreditCards.

com assumed that 15% of gross monthly income would go toward credit card debt. For the average credit card interest rate, CreditCards.com used 19.67%, the average midpoint of the APR ranges the site measured on 100 popular cards in mid-October.

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

Источник: https://www.creditcards.com/credit-card-news/states-debt-burden/

States With the Worst Credit Card Habits

Southern states most burdened by credit card debt: Study

Relying too much on credit cards to make ends meet is a bad habit to get into.

Credit cards typically come with high interest rates and harsh penalties for late payment fees, meaning even small amounts of credit card debt can spiral control.

Some states do a better job of staying on top of their credit card debt than others. Below SmartAsset looks at credit card usage data to find the states with the worst credit card habits.

Check out the best rewards credit cards.

In order to find the states with the worst credit card habits we looked at data on credit card debt per capita, credit card debt as a percent of income, delinquency rate on credit card debt, late payment rate and credit utilization rate. Check out our data and methodology section below to see where we got our data and how we put it together.

Key Findings

  • Tardy South – Five of the states with the worst credit card habits are in the South. They are Florida, Georgia, Texas, North Carolina and South Carolina. A big reason these states rank so poorly is that residents tend to struggle with paying their credit card bills on time.
  • Alaska toeing the line – Alaska leads the nation in both credit card debt per capita and credit card debt as a percent of income, yet it ranked only 12th in this study. How did it escape the top 10? Outside of being reliant on their credit cards, residents of Alaska do a good job at paying them off in a timely fashion. For example, only 5.

    4% of credit card debt in Alaska is greater than 90 days delinquent, on top of that only 0.28 late payments per billing cycle.

  • Midwest is best – Several states in the Midwest are the most responsible credit card users, according to our study. Nine of the bottom 10 states in the study (i.e.

    the states with best credit card habits) are in the Midwest, including Iowa, Wisconsin, Nebraska, North Dakota, South Dakota and Minnesota.

1. Florida

According to our data, the Sunshine State is one of the most credit card debt-burdened in the country. On a per capita basis, Florida residents have $2,910 in credit card debt. While the state only ranks 14th for that metric, it becomes worse when income is taken into consideration.

Florida ranks second in the nation for credit card debt as a percent of income. Credit card debt per capita equals 11.5% of median annual individual income in Florida.

Florida residents also seem to be feeling the pressure of that mounting debt as they have the second-highest credit card delinquency rate in the country.

2. Georgia

Florida’s neighbor, Georgia, comes in second. Residents of the Peach State appear to be fond of using their credit cards. Our data tells us that on average Georgia residents have a credit card utilization of 34.8%.

That’s the highest in the top 10 and second-highest in the nation. Georgia residents also seem to struggle to make their credit card payments on time. Our data shows us that the average resident makes about 0.

6 late payments per billing cycle.

3. (tie) Nevada

Nevada leads the nation in its delinquency rate, with just under 11% of all credit card debt being more than 90 days delinquent. While putting off paying credit card debt may offer short-term reprieve to Nevada residents, not making those payments may hurt their credit scores in the long term. Current data shows that Nevada residents use about 32.7% of their credit limit on average.

3. (tie) Texas 

They say everything is bigger in Texas. Except, perhaps, credit card debt. Texas residents hold $2,760 in credit card debt per capita. That translates to 10.1% of median annual income.

If we only considered those two metrics, Texas would not be in the top 10. However residents in Texas have a tough time making payments on time.

 The Lone Star State ranks second for late payment rate, with the average resident making over 0.6 late payments per billing cycle.

5. Arizona

The Grand Canyon State ranks fifth in our study of the states with the worst credit card habits. For the average resident of Arizona to pay off his credit card debt in its entirety he would need to fork over 10.

5% of his annual income. This may not be a bad strategy for some Arizona residents as it would allow them to lower their utilization rate. Our data shows that, on average, Arizona residents are using 31.

2% of their credit limit.

6. North Carolina

Another Southern state, North Carolina, cracks our top 10. Residents of the Tar Heel State struggle to pay their credit card debt. Just under half of credit card payments are made late, which is the ninth-worst rate in the study.

However North Carolina residents only carry $2,600 in credit card debt per capita, an above average score. One concern however is that credit card debt on the rise.

In 2014, the average North Carolina resident held $2,500 in credit card debt, while in 2015 that figure was $2,600. That is a growth of 4%.

7. (tie) California

In a recent article we found that California is the most debt-saddled state in the union, so it is no huge surprise to see them in this top 10. California residents carry the second-highest amount of credit card debt in the top 10.

On a per capita basis residents owe $3,060 to credit card companies. The picture looks worse once we take income into consideration. The median individual annual income in California is $28,068. So paying off the per capita credit card debt in full would require 10.

9% of the average Californian’s income. For that metric California ranks fifth in the country.

7. (tie) New Mexico

Residents of the Land of Enchantment are tied with the Golden State when it comes to bad credit card habits. New Mexico residents tend to make late credit card payments. The average resident here makes about 0.

47 late payments per billing cycle. As we mentioned previously, late payments can cause your credit score to take a hit. Plus, a large chuck of credit card debt in New Mexico is delinquent.

New Mexico ranks in the top 15 for both those metrics.

9. (tie) New York

Few residents carry as much credit card debt as those in New York state. New York residents have $3,380 in credit card debt per capita. That’s equal to around 11.1% of the state’s annual individual median income. For both those metrics, New York ranks in the top 10.

 Interestingly, despite those high debt numbers, New Yorkers tend to pay their credit card bills on time. The average resident makes about 0.35 late payments per billing cycle, which ranks 29th in the country, a score almost good enough to drag New York the top 10.

9. (tie) South Carolina

South Carolina residents take the opposite attitude to credit card debt than New York residents do. In South Carolina residents carry $2,380 in credit card debt per capita, which is only 9.6% of median individual annual income.

If those two metrics were the only ones we considered, South Carolina would be nowhere near the top 10. And yet, despite the relatively small amount of debt they carry, South Carolina residents appear to struggle to pay it off on time. Over 8% of credit card debt in South Carolina is delinquent and 54.

6% of payments are made late. In both these metrics, South Carolina ranks fifth.

Data and Methodology

In order to find the states with the worst credit card habits, we looked at data on 47 different states and Washington, D.C. We did not have data for three states – Delaware, New Hampshire and New Jersey – so those states were excluded from our study. For the remaining states (plus D.C.) we looked at the following five metrics:

  • Credit card debt per capita. Data is from 2015 and comes from the Federal Reserve Bank of New York (specifically from the New York Fed Consumer Credit Panel/Equifax).
  • Credit card debt as a percent of median individual annual income. Data on credit card debt is from 2015 and is from New York Fed Consumer Credit Panel / Equifax. Data on incomes is from 2015 and comes from the U.S. Census Bureau’s American Community Survey.
  • Credit card delinquency rate. This is the percent of all outstanding credit card debt which is at least 90 days delinquent. Data is for 2015 and comes from the Federal Reserve Bank of New York (specifically from the New York Fed Consumer Credit Panel/Equifax).
  • Late payment rate. This is the number of late payments made per billing cycle. Data comes from the Experian’s 2015 State of Credit Report.
  • Utilization rate. This is the percent of credit being used by the total amount of credit available. Data comes from Experian’s 2015 State of Credit Report.

We ranked each state across each of the metrics, giving equal weight to all metrics. Then we found the average ranking for each state. We based our final score off of this average ranking. The state with the highest average ranking received a 100. The state with the lowest average ranking received a 0.

Questions about our study? Contact press@smartasset.com. 

Photo credit: ©iStock.com/asiseeit

Источник: https://smartasset.com/credit-cards/states-with-the-worst-credit-card-habits

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