New Jersey, Connecticut and Maryland lead nation in credit card debt

After a brief decline in the total outstanding credit card balance at the end of 2023, Americans are at it again. Americans are currently in debt more than $1.14 trillionbut residents of New Jersey, Connecticut and Maryland lead the way with the highest credit card debt levels.

But that’s not the whole story. Costs for goods and services are rising across the country. Add that to persistent inflation and many households feel forced to rely on credit cards to cover daily expenses.

The good news is that despite mounting financial pressures and ballooning balance sheets, it is never too late to pay off debt and get on the road to prosperity.

States with the Most Credit Card Debt

According to Credit boomNew Jersey has the highest average credit card debt, with an average balance as of Q4 2023 of $8,909. Connecticut comes in second with $8,640, followed by Maryland ($8,626), New York ($8,566) and Massachusetts ($8,447).

Mississippi has the lowest average balance at $4,956, while Kentucky ($5,090), Arkansas ($5,363), Alabama ($5,387) and Indiana ($5,501) round out the bottom.

Oregon tops the list of states with the fastest growing balances, with a 7.8% increase between the fourth quarter of 2022 and the fourth quarter of 2023. California is in second place (5.4%), followed by Massachusetts (5.2%), South Dakota (4.4%) and Pennsylvania (3.9%).

All consumer debt is rising

Unfortunately, it’s not just about credit card debt. Other consumer debt – home and student loans, auto loans and leases, medical debt and personal loans – provide additional insight into consumer problems.

According to Experian49 of the 50 states and the District of Columbia experienced increases in consumer debt between 2022 and 2023. The only state that saw a decline is Wyoming, with a decline of 0.3%.

Jon Dulin, personal finance expert at Smart money guidesknow firsthand that consumer debt is rising. “We are coming out of a period of almost double digits and wages that were not keeping pace. When monthly expenses rise faster than incomes, consumers will end up in the red. While you can reduce your expenses, you can only do so much until you reach a point where it negatively impacts your daily life.”

Among the states with the highest consumer debt is the District of Columbia, with an average debt of $166,186, followed by Colorado with $154,481. Washington ($150,462), California ($148,428) and Hawaii ($147,103) round out the top five.

It’s also important to look at the states with the fastest growing consumer debt. Tennessee tops the list with a 6.2% increase, followed by Texas with 5.4%. Alabama (4.7%), North Carolina (4.5%) and Oklahoma (4.2%) follow.

Consumer debt by generation

Although most Americans struggle with debt, the amount varies across generations. Gen Z has the lowest consumer debt ($29,820), followed by the Silent Generation at $38,600.

Generation X has the most debt, with an average of $157,556. Millennials are close behind, with an average of $125,047.

Although all generations have consumer debt, not everyone contributes to it. From 2022 through 2023, both Baby Boomers and the Silent Generation erased their debt, while other generations added. This makes sense for Dulin. “Older Americans are not like younger generations looking for expensive debt such as new homes, cars and taking out student loans.”

It’s not all good news, however, as average credit card debt across generations has increased. Millennials lead the way, with an average increase of 15% to $6,521. The Silent Generation has the smallest balance, at $3,412, but that’s still 2.9% higher than last year.

Strategies to get out of debt

It is critical that people limit the debt they take on and pay off any debt as quickly as possible so they can start building wealth.

“When you’re in debt, you’re essentially working to pay someone else. The money you make goes to a creditor to pay for something you bought,” Dulin explains. “Once your debts are paid off, you pay the money you earn yourself, which you can use to save and invest to get ahead.”

Dulin and many other financial experts recommend the debt snowball method manage debts. “This strategy is the best because it motivates users with quick wins. As you pay off your debts, you will see less monthly debt payments, and this will motivate you to keep going.”

To make the debt snowball work, consumers organize their debts from smallest balance to largest. They then pay the minimum of all their debts – except the smallest one, where they put all the money they can. Once it’s paid off, move on to the next smallest balance.

Another important, often overlooked step? Understanding why the person is in debt in the first place. “Too often people think that they simply have a spending problem because they have debt. But this is usually a mask for something else happening in their lives, such as an unhappy relationship or an unfulfilling job. They take out their frustrations by buying things that make them feel better. The problem is that this feeling is only temporary and people keep spending,” Dulin adds.

If someone really wants that get out of debtthey have to dig deep into the root cause. Doing this can significantly reduce the chances of waking up a few months later and finding yourself in debt again, which is a common occurrence for many.

This article was produced by Media decision and syndicated by Wealth of Geeks.