Average American Credit Card Debt by State
Credit card debt is creeping higher and higher each year, with consumers using their credit cards more and more. American consumers are carrying a whopping $1.003 trillion in credit card debt. Broken down by the number of households in the country, the average amount for each household is $5,700, which includes households that aren't carrying credit cards. The average credit card debt only for households that have credit card debt is $9,333, according to ValuePenguin.
The High Cost of Credit Card Debt
Carrying credit card debt can be expensive, especially on high balances. As interest rates creep higher, the cost of carrying credit card debt will also go higher. The majority of credit cards have a variable annual percentage rate, meaning the APR changes based on an underlying rate that’s indirectly tied to the Federal funds rate. Many credit cards use the prime rate published by the Wall Street Journal as the index rate. Each time the Fed raises interest rates, credit card interest rates soon follow typically rising by the same amount as the Federal funds rate increase.
As of December 2018, the national average credit card rate now stands at 17.21 percent, which is the highest they’ve been since mid-2007, according to CreditCards.com.
Credit card rates are higher than they were just a few months ago: the national average rate was at 16.75 percent six months ago.
The Fed currently has plans to raise rates at least two times in 2019, which means credit card rates will likely go up again. We could see national average credit card rates as high as 18 percent. Credit card rates for consumers with bad credit are already at an average of 24.77 percent. Credit card issuers are not required to tell you when they're raising your rate based on a change to the underlying interest rate.
A Look at the Average Credit Card Debt By State
The average credit card debt varies by state. ValuePenguin used data from the U.S. Census Bureau and the monthly Federal Consumer Credit Report (December 7, 2018 release) to break down the average credit card debt in each state. Alaska has the most credit card debt with $13,048 average credit card debt. At an average interest rate of 17.21 percent, the average Alaskan would have to pay $254 each month to get rid of their credit card debt in three years and would pay a total of $3,748 in interest.
Ohio is the least indebted state with $5,446 average credit card debt. The average Ohioan would pay $194 to pay off their credit card debt in three years and pay just $1,564 in interest.
There are also some regional trends with average credit card debt. States in the Southeast and West Coast have a higher average credit card debt and Midwestern states tend to carry lower average credit card debt. Salaries and cost of living could play a role in the amount of credit card debt in various regions across the United States.
Check the following table for the average credit card debt in your state along with the monthly payment required to get rid of the debt in 3 years and the total interest paid in that time. Total your credit card balances to see how you stack up against the average credit card debt in your state.
|Average Credit Card Debt By State|
|Rank||State||Debt||3 Year Payment||Total Interest|
Tactics for Paying Off Credit Card Debt
States carrying the most credit card debt will have a harder time paying off credit card balances and will pay more interest in the process of doing so. Still, considering the potential for rate increases, paying off credit card debt sooner rather than later will be beneficial.
Transferring to a balance transfer credit card can make it easier to pay off high-interest rate balances. The best balance transfer credit cards have long zero percent interest promotional periods and even extend the promotional rate to purchases as well. During the promotional period, you won't have any finance charges added to your balance so your payments are more effective.
Paying more towards balances each month is another strategy for paying off credit card debt faster. If you have multiple credit cards, it's best to focus on paying off just one credit card at a time by making large, lump-sum payments to one credit card and minimum payments on the others.