WalletHub study ranks states by length of credit card debt payoff timelines

Americans are projected to increase their collective credit card debt by $100 billion this year, bringing the national total to nearly $1.4 trillion, according to a new report released July 21 by WalletHub. The report identifies the states where it will take the longest and shortest time to pay off credit card debt, using data from TransUnion, the Federal Reserve, and the U.S. Census Bureau, along with WalletHub’s proprietary credit card payoff calculator.

The District of Columbia tops the list for the longest payoff timeline, followed by Alaska and Vermont. At the other end, West Virginia, Montana, and Arkansas are the states where residents can pay off their credit card debt the fastest. The study considered both the median credit card debt and the average monthly payments made by residents in each state. "Looking at the median credit card debt in a state can give you a good idea of whether people are struggling or doing well compared to people in other states, but it’s also important to look at how much residents put toward paying their debts off each month. Low average payments lead to long payoff timelines, which in turn lead to high amounts of interest accrued. For example, Vermont’s median credit card debt is relatively low, but it ranks as the state with the third-biggest debt problem due to low average monthly payments," according to Chip Lupo, WalletHub Analyst.

Lupo also said, "The District of Columbia has the worst credit card debt problem in the nation, with the median debt reaching $3,647 across an average of three credit cards per person. The average resident pays $255 per month on their credit card debt, which means it would take an average of over 16 months to pay off their debt and they would accrue $541 in interest during that time."

WalletHub’s Financial Insecurity Survey, released alongside the report, found that 63% of Americans say the U.S. government’s debt level is making them feel financially insecure, and nearly three in four people say their financial situation impacts their mental well-being. The survey also found that 61% of Americans spend money to improve their mood, nearly two in five are scared to ask for financial advice, and 69% feel insecure about their finances. However, 80% say budgeting makes them feel more financially secure. More details are available, according to WalletHub.

Additional statistics and analysis on credit card debt by state, average balances, and delinquency trends can be found according to WalletHub.