North Beats South After Adjusting for Debt, Income
AUSTIN, Texas, December 27, 2016 /PRNewswire/ — The Sun Belt isn’t so bright for debtors: Florida, Texas, Georgia and New Mexico have four of the nation’s five highest credit card debt burdens, according to a new CreditCards.com analysis.
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The study compared the average credit card debt and the median income in each state. The southern states at the bottom of the list suffered more from low incomes than high debts. For example, Florida’s average credit card debt per bank cardholder ranks a respectable 18th among the 50 states, but its median income is 41st.
“It’s very hard to get out of debt if you’re already stretching every dollar to pay for food, housing and other essentials,” said Matt Schulz, CreditCards.com’s senior industry analyst. “If you’re in this position, consider a 0% balance transfer credit card – these interest-free periods last as long as 21 months. Another idea is to dedicate as much extra money as you can towards your credit card debt, certainly much more than the minimum that’s due each month.”
Making only minimum payments, it would take the typical Florida cardholder almost 13 years to retire the state’s average credit card debt of $5,603. And he/she would pay over $3,600 in interest. CreditCards.com recommends dedicating at least 15% of gross monthly income towards credit card debt. In that scenario, the typical Florida resident’s payoff time drops to just 18 months and costs $678 in interest.
Highest Credit Card Debt Burdens*
1. Alaska (20 months, $992 interest)
2. New Mexico (20 months, $743 interest)
3. Georgia (18 months, $716 interest)
4. Texas (18 months, $712 interest)
5. Florida (18 months, $678 interest)
Lowest Credit Card Debt Burdens
46. Wisconsin (14 months, $421 interest)
47. Massachusetts (13 months, $482 interest)
48. Minnesota (13 months, $458 interest)
49. Iowa (13 months, $379 interest)
50. North Dakota (12 months, $370 interest)
* CreditCards.com calculated these payoff times and interest charges using the average credit card debt per bank cardholder (according to Experian) and the median income per resident with earnings (courtesy of the U.S. Census) in each state. CreditCards.com assumed that 15% of gross monthly income would go towards credit card debt. For the average credit card interest rate, CreditCards.com used 15%, the average charged by 100 popular cards that it surveyed on December 7, 2016.
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