If you have thousands of dollars in credit card debt, you’re not alone. The average adult U.S. resident carries $4,192 in credit card debt, as of April 2019, according to statistics from the Federal Reserve. It could be even worse if you live in Alaska, the state with the highest credit card debt. Alaskans carried an average of $10,685 in credit card debt as of the end of Q1 2019.
According to Experian Americans collectively possess a total of $834 billion in credit card debt, including major and retail credit cards. That total contributed to $13.3 trillion in total consumer debt at the end of 2018, which the New York Federal Reserve Consumer Credit Panel reports had risen to $13.86 trillion in the second quarter of 2019 (an increase of approximately $192 billion)
If you are one of the 189 million Americans with at least one credit card, you may wonder how your debt stacks against others in your state. And, more importantly, how long will it take you to pay off your debt? Let’s put it all into perspective—and look at some solutions to that mounting credit card debt.
The Chamber of Commerce ranked U.S. states according to their average credit card debt in Q1 2019, based on data from the U.S. Census Bureau, the Federal Reserve Bank of New York, and news site CNBC.
States with the highest credit card debt
- Alaska – $10,685
- Virginia – $9,120
- Texas – $9,100
- Maryland – $9,009
- Connecticut – $9,000
- New Jersey – $8959
- Georgia – $8,738
- New York – $8,510
- Colorado – $8,463
- Hawaii – $8,423
It’s not surprising that the states with the highest credit card debt tend to correspond with higher living costs. Of the 10 states listed above, six also made the list of states with the highest cost of living. And the pricey states of California and Massachusetts weren’t far behind the top ten states for credit card debt, racking up $8,144 and $7,994 in credit card debt per person, respectively.
When we look for regional trends on the top 10 list for credit card debt, it’s easy to see that debt tends to cluster on the Eastern seaboard. Six of the 10 states on the list are located on the East Coast. Alaska and Hawaii likely struggle with credit card debt due to the high cost of living associated with being separate from the U.S. mainland.
States with the lowest credit card debt
- Iowa – $6,726
- North Dakota – $7,068
- South Dakota – $7,199
- Michigan – $7,382
- Indiana – $7,393
- Kentucky – $7,428
- Mississippi – $7,433
- Montana – $7,444
- Idaho – $7,518
- West Virginia – $7,563
Overall, states with the lowest credit card debt tend to be clustered in the Midwest, with only Montana and West Virginia as outliers.
If you have high-interest credit card debt you can’t pay off, you might be tempted to move to the Midwest thinking the frugal lifestyle may rub off on you, as well, while the lower cost of living might help you stick to your budget. But it’s important to remember that salaries are often lower in states with a lower cost of living. And your debt follows you anywhere you move.
If you have a good job where you live and, more importantly, you like living in your home state, there may be better solutions to get out of debt faster.
Make a plan to get out of debt
If you live in a state with high credit card debt, know that your neighbors may be facing the same financial challenges you are. There’s no shame in credit card debt, and as long as you are making your minimum payments on time, you may be able to maintain your credit score.
As you make those minimum payments and barely see your balances drop, you may be wondering, “How long will it take to get out of debt?” But there’s good news for consumers who have maintained a good-to-excellent credit score. You can consolidate high-interest credit card debt to pay it off faster.
Apply for a personal loan to pay off high interest credit card debt
Personal loans were the fastest growing form of debt in 2018, totaling $291 billion, although this doesn’t come close to the $930 billion in credit card debt. For many consumers, a personal loan can represent a foreseeable end to their struggles with debt.
Unlike revolving credit card debt, personal loans require fixed monthly payments, making it easier to budget. You can take out a 60-month personal loan, use the money to pay off your credit cards, and then pay off your installment loan. You can even save money on interest by paying a little bit more than the monthly payment to pay off your loan before it matures; just make sure the personal loan you select has no prepayment penalties.
Of course, once they’re paid off, it’s important to use your credit cards responsibly, or you could end up back in debt. Closing long-standing accounts can cause your credit score to drop, so keep your credit cards open and use them judiciously to show a low credit utilization ratio and maintain your credit score—don’t charge more than you can afford to pay off at the end of each month.
Consider a balance transfer credit card
While the fixed payments enable you to budget more easily, personal loans may also have high interest rates.
If you have good-to-excellent credit, you should consider a balance transfer credit card with a 0% introductory APR for as long as 18 months/billing cycles on balance transfers with cards like Discover it® Balance Transfer (13.49% – 24.49% variable APR thereafter), Citi® Double Cash Card (15.49% – 25.49% variable APR thereafter), or Bank Americard®credit card (on transfers made in the first 60 days, 14.74% – 24.74% variable APR thereafter). Score 21 months of 0% interest on balance transfers, and no late fees, with the Citi® Simplicity Card (16.24% – 26.24% variable APR thereafter).
Before you do a balance transfer, you’ll want to calculate how much you’ll need to pay each month to pay off the card before the APR rises. You may also consider doing another balance transfer when the introductory APR ends.
Most cards also carry balance transfer fees with each transfer, so you’ll want to factor those costs into your total debt when you determine if a balance transfer makes sense for you.
Again, it’s important to use your older, high-interest credit cards responsibly to avoid getting into deeper debt. Keep them open and don’t charge more than you can afford to pay. Remember to continue making payments on your original cards, too, until you’re sure the balance transfer has processed.