Alaska has the highest credit card debt among all states.
Alaska has the highest credit card debt among all states.
Alaska Ranks First in Credit Card Debt: A Closer Look
Alaska, known for its beautiful landscapes and natural wonders, has found itself at the top of an unpopular list. A recent WalletHub study ranked Alaska as the state with the highest credit card debt in 2023. With a median credit card debt of $3,517, Alaska beats out other states for this dubious distinction. But as we delve deeper into the study’s findings, we see that Alaska is not alone in its struggle with credit card debt.
In second place is the District of Columbia, with a credit card debt of $3,290. Trailing closely behind are Colorado ($3,106), New Hampshire ($2,793), and Vermont ($2,515). On a positive note, there are states with relatively low credit card debts. West Virginia takes the crown for the lowest credit card debt at $2,131, followed by Mississippi ($2,304), Kentucky ($2,230), Pennsylvania ($2,439), and Iowa ($2,077).
These figures, however, do not tell the whole story. In 2022, Americans collectively accumulated a staggering $179.4 billion in credit card debt, bringing the total national debt to over $1.1 trillion. WalletHub’s study employed TransUnion data to analyze the median credit card balances and payments of residents in each state, excluding store credit cards. With an assumed average interest rate of 20.92%, WalletHub determined the number of months it would take to pay off the balance and the resulting finance charges.
Thus, Alaska earned the unfortunate title of having the least sustainable credit card debt. In other words, it will take residents of Alaska the longest to pay off their credit card debt compared to individuals in other states.
The Many Factors Leading to Debt
On paper, it might seem logical to assume that individuals with lower incomes would have greater credit card debt. However, a U.S. Chamber of Commerce report reveals that the opposite is often true. The study ranks Alaska and Virginia as the states with the highest credit card debt. According to the Chamber of Commerce, credit card debt is a complex issue influenced by various factors such as the cost of living, affordable housing availability, a state’s overall economy, employment rate, and access to financial education.
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WalletHub consulted several experts for insight into credit card debt. Dorris Perryman, an adjunct associate professor of accounting at Bristol Community College, emphasized that making unnecessary purchases is the primary driver of accumulating large amounts of credit card debt. Perryman also pointed out that paying only the minimum amount on a high-interest credit card does not effectively reduce the card’s balance.
To overcome credit card debt, Paul Obermann, assistant finance professor at Idaho State University, recommends taking a few key steps. First and foremost, individuals must have a comprehensive understanding of their outstanding debts across all credit cards and loans. Next, developing a detailed plan or budget for future payments is essential. Lastly, it is crucial to avoid taking on additional debt as it may necessitate revisions to the budget, hindering efforts to become debt-free.
In conclusion, while Alaska may have found itself atop the list of states with the highest credit card debt, it is far from an isolated case. The issue of credit card debt is influenced by a multitude of factors, and understanding personal finances and making informed decisions can help individuals break free from the burden of debt. By following expert advice, creating a budget, and actively managing debts, anyone can work towards achieving financial freedom.
Recommended Articles: – A Guide to Debt: Good vs. Bad and Tips to Better Manage It – How To Choose a Credit Card for You – Credit Cards vs Charge Cards: What Are the Differences?
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