BELLINGHAM— By early 2022, Americans had racked up more than $1 trillion in credit card debt, but not every state has the same weight or debt as others, according to a recent study by WalletHub, a personal finance website.
The study compared all 50 states and the District of Columbia using TransUnion credit data to find the total cost and time it took to pay off median credit card debt balances.
Washington State had the third highest credit card debt in the nation, with median credit card debt of $2,471 and a repayment term of 14 months and 21 days.
The most indebted state was Alaska, with a median credit card debt of $3,206 that will take about 17 months and 27 days to pay off.
The states with the lowest credit card debt were Mississippi, Arkansas, West Virginia, Iowa and Louisiana, with median debt as low as $1,806.
The study also asked professionals for their views on credit card debt and how easily it is attained and included their expertise in the report.
Most people don’t realize when debt is piling up and don’t calculate the costs of increasing debt, said Rosabeth Moss Kanter, Arbuckle Professor at Harvard Business School in the report.
“Lack of budgeting, impulse buying, and generally spending beyond income are behaviors that can lead people into massive credit card debt,” said Mauricio Rodriguez, professor of finance and real estate at Texas Christian University, in response to the report.
How to get out of credit card debt
It can be easy to get stuck in credit card debt, but it can be extremely difficult to get out of it.
The Washington State Attorney General’s office advises Washington residents in debt to seek credit counseling, but to make sure they are legitimate. Choosing a credit counselor can be risky, but the US Department of Justice’s US Trustee Program has a list of government-approved credit counseling agencies.
The bureau also encourages Washington residents to be extremely careful when investigating “credit repair” clinics and companies that promise to repair your credit, while charging you extremely high fees.
The Federal Trade Commission offers advice on how to settle credit card debt:
■ Talk to your credit card company to try to create a modified payment plan that you can manage.
■ Contact a credit counseling company for help or advice.
■ Research debt settlement companies and assess the risks associated with the programs.
Tips from Chase Bank to help you pay off your credit card debt:
■ Know your budget by tracking your income and expenses.
■ Know your debt by listing your credit card debt, minimum payments and annual percentage rate.
■ Select a credit card debt reduction strategy. The snowball method is to pay the most on the credit card with the least debt to pay it off completely, while paying only the minimum amount on all other cards. Once the card is paid off, you move on to paying off the next card with the lowest overall debt. The avalanche method targets the credit card with the highest APR first, while paying the minimum amount on all other credit cards. Once the card is paid off, you target the card with the next highest interest rate. The avalanche method allows you to tackle one of the biggest contributors to debt, interest payments.
■ Automate your payments and align them with your paychecks where possible.
■ Look for other ways to pay off your credit card debt. Check to see if debt counseling services, balance transfer credit cards, debt consolidation loans, home equity loans or lines of credit could help you.
■ Cultivate a healthy credit lifestyle and establish a sustainable, healthy and affordable credit lifestyle.
■ Freeze or lock your card if you want to avoid incurring more debt. If you need to deactivate your card to limit your own spending, you can ask your bank to freeze your account or lock your card, but make sure you don’t close your account. This can improve your credit utilization ratio, average account age, and credit mix, all of which can benefit your credit score.