As the personal finance website WalletHub points out, Americans are known for racking up credit-card debt, but right now the total is “shocking.” At the beginning of 2021, Americans owed nearly $900 billion in credit-card debt.
To determine which states have the least and the most sustainable credit-card debts, WalletHub drew upon TransUnion credit data to calculate the cost and time required to pay off the median card balances of each of the 50 states and the District of Columbia.
The survey revealed that Virginia is the state with the 14th-most least sustainable credit-card debt.
To establish the rankings, WalletHub used the median credit-card balance and monthly credit card payment of residents in each state and determined the required number of months to pay off that balance and the resulting finance charges. To do so, the company made the following assumption:
Consumers would pay an average 15.91 percent interest rate, based on the APR paid by existing cardholders, according to the average interest rate assessed on accounts with finance charges. Using that percentage, WalletHub computed the cost of paying off the state’s median credit-card balance.
Finally, WalletHub ranked the states based on the calculator’s outputs. Rank 1 corresponds with the state with the least sustainable credit-card debt — that is, the state with the longest payoff timeline.
The rankings with the median credit card debt and the months and day until payoff were as follows: 1) Alaska, $2,839, 15 months and 8 days 2) Montana, $2,249, 14 months and 23 days 3) District of Columbia, $2,404, 14 months and 12 days 4) Colorado, $2,576, 14 months and 11 days 5) Vermont, $1,850, 14 months and 7 days 6) North Dakota, $2,001, 13 months and 13 days 7) Kansas, $2,186, 13 months and 10 days 8) Washington, $2,236, 13 months and one day 9) Oregon, $2,058, 12 months and 26 days 10) Nebraska, $2,022, 12 months and 19 days 11) New Hampshire, $2,111, 12 months and 17 days 12) Texas, $2,323, 12 months and 16 days 13) Idaho, $2,083, 12 months and 14 days 14) Virginia, $2,371, 12 months and 10 days 15) Maryland, $2,312, 12 months and eight days.
The states in the best shape (42 through 51) were 42) Illinois, $2,091, 11 months and two days 43) Oklahoma, $2,233, 11 months and one day 44) Ohio, $1,940, 10 months and 27 days 45) Iowa, $1,690, 10 months and 23 days 46) Pennsylvania, $1,871, 10 months and 12 days 47) New York, $1,854, 10 months and eight days 48) Hawaii, $2,220, 10 months and five days 49) Alabama, $2,115, eight months and 27 days 50) Mississippi, $1,912, eight months and 19 days 51) South Dakota, $1,45, four months and 15 days.
WalletHub noted that the $900 billion in credit-card debt is “a bit less” than the nation’s card holders had in 2020, thanks to record paydowns due to the stimulus checks. But the company predicts that net credit card debt “will increase by $60 billion in 2021.”
