Research of the Week: Average Credit Card Debt by State

Who has the most cards, the most debt and the lowest credit scores in the nation?

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting study

Experian just released their 2017 State of Credit report. It looks at average VantageScore®, number of accounts and average credit card debt by state. This basically shows where consumers stand with credit and debt at start 2018.

The big result

Although Experian’s map focuses on VantageScores by state, it also shows average debt and number of accounts. Alaskans credit users currently have the highest credit card balances, even though they don’t have the most accounts. Meanwhile, credit users at the other end of the balance spectrum in Iowa have average debt that’s over $3,000 less.

The fascinating details

Here’s the Top 5 highest and lowest average credit card debt by state:

Highest BalancesLowest Balances
1. Alaska: $8,51550. Iowa: $5,155
2. Connecticut: $7,25849. Wisconsin: $5,363
3. Virginia: $7,16148. Mississippi: $5,421
4. New Jersey: $7,15147. North Dakota: $5,511
5. Maryland: $7,04346. West Virginia: $5,547

Now see how that compares to the Top 5 highest and lowest average number of credit cards by state:

Highest Number of CardsLowest Number of Cards
1. New Jersey: 3.4950. Mississippi: 2.57
2. New York: 3.3449. Iowa: 2.67
3. Rhode Island: 3.2648. Alabama: 2.69
4. Hawaii: 3.2547. Oklahoma: 2.71
5. Connecticut / California: 3.2346. West Virginia / Arkansas: 2.76

What you can do

“Most Americans could benefit from focusing on paying off debt in 2018,” says Gary Herman, President of Consolidated Credit. “Reducing credit card debt offers several benefits. It’s good for your credit, debt-to-income ratio and budget.”

  1. First, paying off credit card debt helps you save money by eliminating high interest rate debt that costs you every month you carry a balance.
  2. Next, if you eliminate a debt, you eliminate a bill, which frees up cash flow in your budget; that makes it easier to afford all your monthly expenses.
  3. As you pay off balances, you also decrease your credit utilization ratio, which is the second biggest factor used in credit scoring.
  4. Finally, cutting debt decreases your debt-to-income ratio. This not only makes you more financially stable, it makes you more creditworthy to lenders and creditors. That could be key if you plan on applying for new financing this year.

“There’s no good reason that you need to carry a credit card balance,” Herman continues. “It’s not good for your credit score and it’s hard on your budget. The idea that carrying balances improve your credit score is a myth. It’s better for your score to pay off your debt and get to zero. Plus, then you can make charges and pay them off in-full at the end of each month. This strategy allows you to use credit interest-free.”

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