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Alaska, we need to talk. As residents there pack on the debt – The Last Frontier tops all states in terms of average credit debt per person – there’s no denying Americans in all states share in the nation’s collective debt tally.

It’s no surprise some of the highest per-person debt can be found in states notorious for their high cost of living, while some states with the lowest cost of living have lower debt rates.

Still, high or low, debt is debt and owing money at today’s interest rates comes at a high cost. Regardless, America is hooked on credit, and for many, it seems, living off credit cards may be an unavoidable means of survival.

Whether it’s used for emergencies, impulse buys or simple convenience, credit card debt can hurt your long-term financial future.

High-interest rates and accumulating balances can lead to a never-ending cycle of debt, making it challenging to achieve financial goals such as buying a home or retiring comfortably.

Carrying substantial credit card debt can also harm your credit score, impacting your ability to secure loans at favorable terms in the future.

Crucially, diverting a significant portion of your income towards debt payments hinders your capacity to save and invest, depriving you of potential growth and financial security.

Credit card debt in 2023

The numbers say it all: If you have credit card debt, you are not alone. Federal Reserve data shows credit card debt topped $1 trillion in August.

During the pandemic, government stimulus contributed to a significant drop in debt, from $858 billion in early 2020 to $736 billion a year later. Now with federal stimulus largely gone, credit card debt has resumed its upward march.

That rise coincides with stifling interest rate hikes that have helped push the average credit card interest rate to nearly 21% in August 2023.With interest rates likely to remain high, monthly interest payments continue to rise and create extra risk for consumers if the economy sours.

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Credit card debt by state

Despite some easing in 2023, inflation and the higher cost of nearly everything has sent us racing for our credit cards. It makes sense that some of the most expensive places to live in the U.S. also hold some of the highest credit card debt.

Moneywise ranked all 50 states based on each state’s average credit card debt.

See which states carry the greatest, and which carry the lowest balances on their credit cards.

States with the most credit card debt

Alaska ranks number one,  with the highest average credit card debt per person, at $4,430, with Hawaii not far behind at $4,260 per person – rankings that reflect the challenges of paying for more expensive basics that must be shipped from great distances at greater cost.

Other states were acutely affected by the double whammy of pandemic-connected job losses and inflation. The top 5 debt states were rounded out by New Jersey ($4,220), Maryland ($4,190) and Connecticut ($4,040).

Colorado is tops among states with the highest average total personal debt, ($89,170), followed by California ($84,730), Hawaii ($82,650), Washington ($82,300) and Maryland ($80,130).

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States with the least total personal credit card debt

Mississippi residents carry the least total personal credit card debt, with $2,450, followed by West Virginia ($2,540), Kentucky ($2,590), Arkansas ($2,670) and Alabama ($2,690).

West Virginia has the lowest average total personal debt at $34,210, followed by Mississippi ($38,130), Arkansas ($39,150), Oklahoma ($39,830) and Kentucky ($40,290).

Why is credit card debt increasing?

Even though credit cards have high annual percentage rates (APRs), making them one of the most expensive ways to borrow money on a monthly basis, many Americans continue to accumulate ever-increasing amounts of debt.

That’s when the vicious cycle sets in: While balances are higher, many Americans carry credit card debt from month to month, for which they are paying more interest, meaning more of their payments are going to the interest than their balance each month, which contributes to increasing debt.

Credit is a piece of the household debt picture

The New York Fed reports that overall household debt rose 1% to $17.06 trillion during the second quarter of 2023. Higher credit cards and auto loan balances account for large shares of household debt, exacerbating the challenges posed by inflation and the costs of daily living, such as housing, education, healthcare and transportation.

Food prices have hit households hard, rising 11% percent from 2021 to 2022 and remaining high through 2023. The average gallon of gasoline, another daily staple, rose more than 8%.

Those escalating costs are forcing many to turn to credit cards to manage immediate needs, unaware of, or without the means to otherwise avoid the potential long-term consequences.

Additional factors contribute to credit debt

Credit card rewards and incentives: Credit card companies have historically and aggressively promoted rewards programs, cashback offers, and other incentives to attract consumers.

These perks often encourage more spending on credit cards to accumulate rewards points, causing consumers to overspend and accumulate higher balances on their cards.

Interest rates: As card rates rise, outstanding balances grow and keep borrowers in an expensive cycle of minimum payments that extend the life of borrowing.****

Ways to lower your credit card debt

There are many creative ways to pay down credit card debt, regardless of your debt total. Consider these strategies:

Snowball, with a negotiated twist: The snowball method involves paying off debts starting with the smallest balance while making minimum payments on larger debts.

Add a twist by negotiating with your credit card companies for lower interest rates.

A simple call to customer service explaining your situation and commitment to paying off debt may result in reduced rates. Lower interest rates mean more of your payments go towards the principal, accelerating your debt payoff journey.

Debt avalanche: The debt avalanche method prioritizes the highest interest rate debt while making minimum payments on other debts.

Once the highest interest debt is eliminated, the focus shifts to the next highest interest debt, and so on.

It’s an effective way to reduce the overall interest paid on your debts, but it also demands discipline. By targeting the highest-rate debt (and higher balance), the approach ditches the immediate psychological rewards offered by the snowball’s easy-wins approach of targeting lower balances first.

Credit card shuffle: Consider transferring high-interest credit card balances to a single card with a lower interest rate.

Many credit card companies offer introductory periods with 0% APR for balance transfers or even cash back. Consolidating your debts in this way can help you save money on interest and make it easier to manage payments with only one creditor.

There are some downsides to this option to be aware of: Many such offers rely on higher credit scores.

Also, typically these low-interest offers expire after a year and any unpaid balance is owed at a new, much higher interest rate.

Finally, this option becomes another credit source to use. Only use this method if you are confident you can be disciplined to not use the card to rack up even more debt.

Make micropayments: Break the habit of single, monthly payments and make micropayments throughout the month whenever you have extra funds available.

Apps and financial platforms now enable you to pay small amounts toward your credit card balance whenever you like. These micro-contributions may seem insignificant, but they add up over time and can make a notable difference in paying off your debt faster.

Start a side hustle: Boost your income by starting a side hustle or freelancing gig. The additional earnings can be dedicated solely to paying down credit card debt.

Use your talents and interests to explore opportunities like online tutoring, graphic design, or delivering food. The key is to push these earnings directly toward debt reduction, helping you reach your financial goals quicker.

Debt-free challenges: Challenge yourself to reduce expenses drastically for a fixed period, such as a month or three months. Cut back on non-essential spending, cancel unused subscriptions, and find creative ways to save money on necessities.

Allocate all the money saved towards your credit card payments. Engaging in such challenges not only accelerates debt repayment but also helps build better spending habits in the long-term.

Consolidate: Do you have a lot of debt, coming from a lot of places? Consider consolidating those payments into a single payment through a consolidation plan, which can frequently include lower interest rates to help you pay more to your principal.

Bringing all your payments into a single monthly sum will give you more clarity into your debt picture and make your money management simpler by not having to juggle multiple debts with different balances, interest rates and payment dates.

Money management tips to keep debt at bay

Assuming your debt is under control or entirely gone, several strategies are ready to keep you debt-free and grow your wealth.

High-yield savings accounts

Unlike traditional savings accounts, high-yield savings accounts provide a significantly higher interest rate, allowing money to grow more rapidly over time.

By stashing away funds in these accounts, you can build a safety net for unexpected expenses, reducing the likelihood of resorting to credit cards or loans to cover emergencies.

High-yield savings accounts foster a disciplined approach to savings. The allure of higher interest rates encourages account holders to contribute regularly, creating a habit of setting aside money rather than spending it impulsively.

As a result, the propensity to accumulate debt for non-essential purchases diminishes, promoting better financial decision-making.

Additionally, these accounts offer flexibility and accessibility, enabling quick withdrawals, if necessary. This accessibility, coupled with the peace of mind gained from having a robust savings cushion, reduces the temptation to rely on credit as a short-term solution.

Personal finance apps

In the modern digital age, managing personal finances has become more accessible and efficient with the advent of personal finance apps. These versatile tools play a crucial role in helping individuals pay down debt effectively and achieve financial freedom.

Budgeting and expense tracking: One of the fundamental aspects of paying down debt is establishing a well-structured budget. Personal finance apps provide intuitive budgeting features allowing users to set spending limits for various categories and track their expenses in real time.

By understanding where their money goes, users can identify unnecessary expenses, make informed financial decisions, and allocate more funds towards debt repayment.

Debt repayment planning: Personal finance apps enable users to create customized debt repayment plans.

By inputting their debt details, including interest rates and minimum payments, individuals can visualize the most effective strategies to pay down their debts faster. These apps often offer tools like debt snowball and debt avalanche methods to help users determine the optimal order in which to tackle their debts.

Automatic bill payments: Late payments can lead to additional fees and negatively impact credit scores. Personal finance apps often come with automatic bill payment features, ensuring that users never miss a due date. By setting up recurring payments for their credit cards, users can build a consistent repayment routine, gradually reducing their debt burden.

Be mindful of this method of automatic charges to your credit card. To avoid incurring interest charges and accruing debt, transfer cash from your bank account to your credit card to cover these charges each month.

Goal setting and progress tracking: If your credit debt is large, paying it down will feel like a long-term journey that demands discipline and motivation. Personal finance apps help by allowing users to set specific financial goals, such as paying off a certain amount of debt within a given timeframe. Regular progress tracking and visual representations of achievements serve as powerful motivators, encouraging users to stay on track and celebrate each milestone achieved.

Financial education and insights: Many personal finance apps offer educational resources, tips, and insights on better money management. By utilizing these features, users can develop a deeper understanding of personal finance, make smarter financial decisions, and avoid falling into debt traps in the future.

Investment apps

Investment apps have emerged as powerful tools to help individuals avoid falling into a debt trap. These apps offer a range of features and benefits that promote financial stability and smart money management. Here's how these apps can assist you in steering clear of a debt problem:

Building savings and emergency funds: Investment apps encourage regular contributions to investment accounts, fostering a savings habit. By consistently setting aside a portion of your income for investments, you create a safety net that can help you avoid relying on credit cards or loans for unexpected expenses. Having a well-funded emergency fund ensures that you can cover unforeseen costs without incurring debt.

Diversification and risk management: Investment apps typically offer a diverse range of investment options, including stocks, bonds, mutual funds, and exchange-traded funds (ETFs). By spreading your investments across various assets, you reduce the risk of severe financial losses. A well-diversified portfolio can help protect your wealth and prevent sudden financial setbacks that may otherwise lead to debt.

Long-term financial planning: Investment apps often provide tools and calculators to help users create long-term financial plans. By setting clear financial goals and understanding how much you need to save and invest to achieve them, you gain a sense of direction and control over your finances. This proactive approach reduces impulsive spending and keeps you on track to avoid unnecessary debt.

Access to financial education: Many investment apps offer educational resources, articles, and videos that teach users about personal finance, investing, and money management. This knowledge equips users with the skills to make informed financial decisions, avoid risky investments, and prioritize responsible spending.

Automated investing and dollar-cost averaging: Investment apps often enable automated investing and dollar-cost averaging. Regularly investing a fixed amount of money, regardless of market fluctuations, reduces the risk of making emotional decisions during volatile times. This systematic approach to investing can prevent impulsive actions that might lead to financial strain and potential debt.

Credit card debt by state: ranked


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Chris Clark Freelance Contributor

Chris Clark is freelance contributor with MoneyWise, based in Kansas City, Mo. He has written for numerous publications and spent 18 years as a reporter and editor with The Associated Press.

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