How Credit-Card Debt Affects California

Americans started 2019 off with more than $1 trillion in credit-card debt and projected to have a net increase of $70 billion this year, according to the the personal-finance website WalletHub.

Americans aren’t all in the same boat when it comes to credit-card debt, though, according to WalletHub, according to Adam McCann, financial writer for WalletHub. People in some states are better than others when it comes to avoiding charging more than they can afford.

California, for example, ranks No. 18. Not the best, but certainly not the worst. Here’s a snapshot that helped categorize California as No. 18.

  • Median Credit-Card Balance ($2,672)
  • Median Income ($50,190)
  • Cost of Interest Until Payoff ($261)
  • Expected Payoff Timeframe (13 months and 18 days)

To determine which states have the least and most sustainable credit-card debts, WalletHub tapped 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. as of September 2018, based on TransUnion data.

States with the highest media credit-card debt are:

  1. Alaska
  2. District of Columbia
  3. Virginia
  4. Colorado
  5. Washington

States with the lowest median credit-card debt are:

  • Mississippi (47)
  • Kentucky (48)
  • Vermont (49)
  • Wisconsin (50)
  • Iowa (51)

WalletHub’s analysis included credit cards that carried a balance and excludes store cards.

Using the median credit-card balance and monthly credit card payment of residents in each state, WalletHub determined the required number of months to pay off that balance and the resulting finance charges. In order to do so, it made the following assumption:

Consumers would pay an average 16.91% 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, it computed the cost of paying off the state’s median credit-card balance.
Finally, it 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.





Image Sources

  • American Express Credit Cards: Image by Republica from Pixabay