States with the 10 highest credit card debt to cost-of-living ratios
|
State
|
2016 avg. balances on credit cards
|
COL and tax adjusted income
|
Debt as a % of income
|
|
Hawaii
|
$5,966
|
$22,567.45
|
26.43%
|
|
Alaska
|
$7,552
|
$35,877.54
|
21.05%
|
|
California
|
$5,563
|
$27,900.21
|
19.94%
|
|
Connecticut
|
$6,454
|
$33,543.54
|
19.24%
|
|
Maryland
|
$6,268
|
$33,066.13
|
18.96%
|
States with the 10 lowest credit card debt to cost-of-living ratios
|
State
|
2016 avg. balances on credit cards
|
COL and tax adjusted income
|
Debt as a % of income
|
|
North Dakota
|
$4,599
|
$39,595.96
|
11.61%
|
|
Iowa
|
$4,410
|
$36,214.18
|
12.18%
|
|
Wyoming
|
$5,365
|
$42,259.83
|
12.69%
|
|
Wisconsin
|
$4,693
|
$36,137.52
|
12.99%
|
|
Nebraska
|
$4,835
|
$37,049.57
|
13.05%
|
Study reveals cost-of-living is an excellent indicator of your credit card debt
News Release from CardRatings
Foster City, November 29, 2017 -- Perhaps one of the best ways to control your credit card debt is simply to move to a different state.
A recent CardRatings study compared costs-of-living in all 50 states to the average credit card debt in those states and found that, in general, the higher the cost-of-living, the higher the credit card debt; this is in spite of scaled wages in those higher costs-of-living states.
People in more expensive states generally have $594 more credit card debt than those in less expensive states. After adjusting median income for cost-of-living and taxes, this made for a debt burden that was 22 percent heavier in more expensive states.
States such as Hawaii, California and Alaska with especially high costs of living had ratios of debt-to-adjusted income of around 20% or more, compared to the overall average of 15.9 percent.
“It would seem that when the cost of living gets to be too much, people do make the mistake of turning to their credit cards to keep up their lifestyles or perhaps just to keep up with the Joneses,” said Brooklyn Lowery, editor of CardRatings.com. “This, of course, only makes the problem worse as interest on credit card debt only adds to your monthly expenses.”
Among the 10 states with highest costs of living in the country, only Massachusetts avoided the list of highest debt as percent of income. The list above, therefore, consists of nine of the 10 most expensive states in the country in which to live (New Hampshire is the 11th most expensive state based on the cost-of-living index).
Conversely, states with lower costs of living (and generally lower incomes overall) have lower average credit card debt. All 10 of the states with the lowest debt-to-income ratio enjoy costs-of-living below the national average.
The study also looked at the relationship between education and unemployment to credit card debt. Unsurprisingly, states with high unemployment also had higher average credit card debt, suggesting that people do lean on credit cards to make ends meet when they are between jobs.
That said, states with higher percentages of college graduates also showed higher credit card debt overall. States with high percentages of college graduates had an average credit card balance $573 greater than states with lower percentages; the percentage debt burden in states with higher levels of college grads was more than 16 percent higher.
“This trend could be indicative of the long-term effects of student loan debt,” Lowery said. “Young people might find themselves using their credit cards to make up for income lost to student loan payments. Certainly this could create even more debt over time as credit card debt is generally much more expensive than student loans.”
Link: Study