Credit Card Debt: The Best and Worst States

Credit Card Debt By State

If you find yourself struggling with credit card debt, the state which you live in might have something to do with it. A lot of people don’t realize it but the cost of living is drastically different in every state. The economy of each state in the US has its own influences and dynamic flow. There are a lot of factors coming into play. A state’s energy costs, its real estate market and the geographical location can create a huge difference for the economy of a state. That in turn, affects the financial situation of the people who live in the state.

The credit card debt in the whole country is seeing itself increase day by day. The first quarter of last year saw the consumer debt at all time highs. They even beat the previous high trends of the 2008 financial crisis. The economy is showing some improvement after a problematic period lasting several years. The people lending money have decreased the stringency of their lending standards. Credit is more easily available in this day and age than it was in the past ten years.

While it may seem like things are looking up, the reality is different. The availability of credit means Americans are borrowing more money. This is true for the relaxation of lending standards as well. All in all, it is contributing to an overall growth in the economy but also in the debt of all consumers – primarily the credit card debt.

Every state has its own expenses for living there. That and other factors come in to affect the way consumers are spending their income. This means that the credit card debt for people also varies from state to state. Here is a look at the credit card debt situation in America state by state.

Top 5 American States with Highest Credit Card Debt:

This is a focused look on the top 5 American states with the highest credit card debt.

Alaska Alaska Credit Card Debt

Topping the list of the states with the highest credit card debt is Alaska. This state has the highest cost of living. Supplying goods to the state is extremely difficult considering the fact that it is so remotely located. This translates to the costs being much higher for the consumers.

The food, basic household items, cars and basically every kind of good is exceptionally more expensive for Alaskan residents. The fact that the state of Alaska has a very high unemployment rate doesn’t help the cause either. There is a heightened dependence on credit cards so that people can meet their most basic needs. A lot of the work in the state is seasonal. This makes meeting the costs of living in the state a lot more difficult in comparison to other states in the country.

Connecticut Connecticut Credit Card Debt

Coming in right after the state of Alaska on the list of top 5 states with the highest credit card debt is the state of Connecticut. The economy of this state has never been able to find any stability. The job market has not seen a lot of movement over the past few years and that increases the amount of debt that the consumers have in the State. The worst of the problems for Connecticut is their GDP. It’s straight up flat right now. In 2016, its GDP was over $15 billion lower than what it was a decade before that.

The housing in Connecticut is more expensive in comparison to other states and this has all come together to increase the overall credit card debt in the state.

Virginia  Virginia Credit Card Debt

Compared to a lot of other states in the country, Virginia has a very good economy. When you compare it to the national average, the unemployment is lower in Virginia. The thing is that even though the economy is doing well, the prices are also soaring. Some of the most expensive real estate can be found in the state of Virginia. This means that the rent is also quite steep. Virginia is an expensive place to live in when you count all the factors together. This is why a lot of the residents of this state with low incomes use credit cards to get by. It is the only option they have when the cash flow dynamic doesn’t work. It’s also the reason why there’s a high credit card debt in this State.

New Jersey New Jersey Credit Card Debt

The Recession which happened a decade ago impacted the whole country. There were few places that were as badly affected as the state of New Jersey. It’s only in the past few years that it has started to show some signs of recovery but it has a very high cost of living. People are struggling to make ends meet in the state of New Jersey because of living expenses. Their real estate prices and property taxes which keep increasing have significantly boosted the consumer debt. Add the high energy and transportation costs to the equation and the high credit card debt for the state doesn’t come as a surprise.

Maryland Maryland Credit Card Debt

With one of the most diverse economies in the country, Maryland seems like a surprising entry on this list. There is significant work being done here with regard to international trade, science and technology and manufacturing. The technical and professional workforce making up almost a third of its total workforce the average income of a household in Maryland is higher than the national average. While there is a lot of buying being done in the state, there is a very high credit card debt being amassed by the population of Maryland as well.

You see, it’s not just the economic factors being bad that can contribute to a high overall credit card debt in a state. Maryland is the perfect example of that.

From what we see in the list above, there are several factors which contribute to the credit card debt of a state.

Top 5 American States with Lowest Credit Card Debt:

Now that we’ve seen the states with the highest average credit card debt, let’s take a look at the ones with the lowest credit card debt in the country.

Iowa Iowa Credit Card Debt

The state of Iowa has the lowest average credit card debt in the country. The economy of the state is driven by agriculture, it is stable and there is little to no unemployment. The cherry on top of all that is the low cost of real estate in Iowa. The fact that the cost of living in Iowa is much lower than in the other states also helps quite a lot.

There is not a single measurable metric in which Iowa is more expensive than other states in the country. The transportation expenses, the utilities and the food are all cheaper. The lifestyle of the Midwest works well with the high quality of life and stable economy to keep the credit card debt low for the people of Iowa. In fact, a lot of people don’t even need to depend on their credit cards at all. They are able to manage their monthly budget quite well.

North Dakota North Dakota Credit Card Debt

Second on the list of the states with the lowest average credit card debt in America is North Dakota. This state is seeing a booming economic dynamic right now. There are plenty of resources for natural gas and oil being explored in the state of North Dakota. This has led to an expansion of their economy and creating more and more jobs for the North Dakotan citizens. The housing and living expenses in the state match the national average but the utilities and transportation are more economical. While most of the land in the state of North Dakota is focused on farming, the number of jobs for this sector account for only 20 percent. The job market in North Dakota is expected to see further growth due to its expanding economy. With all of these factors coming into play, it’s no surprise that the credit card debt in the state of North Dakota is one of the lowest in the country.

Mississippi Mississippi Credit Card Debt

The economy of the state of Mississippi is driven by the manufacturing industry and the agriculture industry. Even though this state has one of the lowest credit card debts in the country, it is owed largely to the fact that most people in the state do not even qualify to apply for high lines of credit. The population of Mississippi consists of the highest number of medically uninsured Americans. That means the medical debt of the country is incredibly high in Mississippi.

It’s not credit card debt that plagues the state of Mississippi; it is the medical cost debt. What’s even more surprising is the fact that the debtors mainly belong to the middle-class demographic of the state.

Wisconsin Wisconsin Credit Card Debt

The state of Wisconsin has seen its economy held up by the large dairy industry it has. The dairy industry accounts for more than half of the state’s economy. While there is a significant agricultural sector, it mainly also contributes to the dairy industry. This makes the corn and grain they produce the most important crop for the state. It’s mostly just used to feed the livestock producing the milk. Naturally, the state is also the largest producer of cheese in the country as well.

Other than all of this, the State of Wisconsin has been making efforts to bring in more and more business. This has resulted in the state successfully creating a lot of jobs for the people. The prediction for the state is that its average household income will increase significantly over the next half decade. Naturally, it also means that there is less reliance on credit cards by the citizens to make ends meet.

Kentucky Kentucky Credit Card Debt

One of the biggest surprise entries on this list, the state of Kentucky has an economy that is almost dismal. In fact, it is the worst in the country. It is ranked second last in terms of average household income. The only reason why the state has such a low credit card debt is the strict laws the state of Kentucky has put into place. These laws make sure that the citizens do not get caught up in a string of debts because of their credit card bills.

Other Major Factors That Affect Debt Levels

Other than the state-to-state economic factors, there are other things which affect the credit card debt levels in the country. The inability to properly budget their money is a leading cause for many Americans drowning in credit card debt. There is barely a concept of savings and that leads to a gradual build up of credit card debt.

A lot of Americans cannot prepare for financial emergencies that might come their way. This is because they don’t have the financial cushion to ease their fall. The lack of income, high medical bills, prescriptions and deductibles also add to the chaotic situation. These factors work in tandem, making it necessary for many Americans to resort to using credit cards.

There are a lot of factors which contribute to the debt levels for American citizens. There are those that are under the control of the consumer. With proactive measures and careful budgeting, they can get those factors under control.

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