Collectively, Americans owe a record-breaking amount of credit card debt—more than a trillion dollars, in fact. And households that carry credit card debt tend to have balances in the thousands of dollars across multiple cards. It’s become a common way of life to buy on credit and pay back what you owe at a later date.
Of course, credit cards play an important role in helping consumers build their FICO scores, or the ratings lenders use to assess how likely you are to repay money in full and on time. A history of responsible credit card use will boost your score and make it easier to qualify for credit; a history containing late payments or maxed-out lines of credit will hurt your standing. Credit cards are not inherently bad or dangerous. It all boils down to how they’re used.
Just like credit card debt varies from person to person, it also varies by state. Here’s a rundown of which states have the most credit card debt, and some information on how residents can tackle their outstanding balances.
States with the Most Credit Card Debt
According to ValuePenguin, here are the 10 states with the highest level of average credit card debt in 2018:
- New Jersey—$9,454
- New York—$8,764
In contrast, Ohio, South Carolina, Maine, Michigan and Pennsylvania had the lowest debt levels by state in the country.
Unsurprisingly, states with a higher-than-average cost of living tend to have higher-than-average amounts of credit card debt, too. Residents grappling with a high cost of living pay more for housing, food, transportation and entertainment—meaning they rack up higher credit card bills and have less income to devote toward paying them off, fueling this cycle. As a general rule of thumb, cities in coastal states tend to have higher debt levels than those more inland.
At the end of the day, anyone can find themselves deep in credit card debt, whether it occurs gradually over the course of years or suddenly following an unexpected expense. Carrying credit card debt isn’t the end of the world, but it’s important to have a plan to address it beyond simply paying the minimum balance due each month. Why? Because paying the minimum balance only prevents late fees; it does nothing to stop interest from building up.
Strategies for Reducing and Eliminating Debt
Whether you live in a big city or a rural setting; a landlocked area or along the ocean, debt happens. If you find yourself deep in debt, it’s time to explore your options for reducing and eliminating it.
- Credit counseling: Work with a certified counselor to learn more about budgeting, debt management and credit so you can create a personalized plan. A credit counselor may recommend you enroll in a Debt Management Plan (DMP), which can help you get lower interest rates in exchange for timely payments.
- Debt settlement: Enrolling in a reputable program means depositing money monthly into a dedicated account, often at the expense of paying your credit card bills. However, once you’ve built up enough, negotiators will reach out on your behalf to creditors, attempting to reach a significantly lower settlement. What makes a program reputable? One with a proven track record of results, to start. Here’s one example: Thousands of Freedom Debt Relief reviews give insight into how this program has resolved more than $10 billion in debt for more than 600,000 people.
- Debt consolidation: Use a lower-interest consolidation loan to pay off your credit card debts all at once. Then repay that loan in regular installments over time. It’s important to make sure you won’t end up paying more in interest over time—and that you can follow through on repaying the loan in full.
- Bankruptcy: A last-ditch effort, declaring bankruptcy is a legal process that allows consumers to wipe out some or all debt, oftentimes in exchange for assets or their value.
Whether you live in the state with the most or least credit card debt—or somewhere in between—there are always debt relief options available.