In this piece, we will take a look at the 25 states with the highest credit card debt in the US. If you want to skip our overview of US consumer spending and recent economic trends that should worry consumers, analysts, and policy makers, you can take a look at the 10 States With the Highest Credit Card Debt in the US.
The American economy is fueled by consumer spending due to being the largest in the world. Private enterprise and capitalist ideals permeate the U.S. way of life, and when compared to several other countries, the pursuit of wealth is often not looked down upon by people. Naturally, this means that consumer well being is quite essential for broader U.S. economic well being, and each year companies and politicians pour over countless initiatives and programs to ensure that American consumers can spend as much as they want.
However, the size of the U.S. economy, which is the biggest in the world, coupled with a high living standard means that most people might find it difficult to fund pricey purchases through their monthly income. This is where the credit card comes in, being a handy medium that allows people to buy now and pay later – with an interest surcharge. Credit cards also provide consumers protection from fraud, and they are often highly sought after since they allow borrowers to develop a credit profile to convince banks to lend them money for pricey purchases such as houses and cars.
These safety and convenience benefits offered by credit cards mean that there are more cards than people in the world. In fact, Insider Monkey took a look at 20 Countries with Most Credit Card Debt in the World and found that as of 2020, there were a whopping 6.8 billion credit cards in the world. This is despite the fact that most of the developing and underdeveloped world, such as countries in Africa and Asia, are still relatively unbanked when compared to their Western peers.
The close link between consumer spending in developed nations like the U.S., Canada, and Germany also means that their governments are able to exercise greater economic control to help manage macroeconomic metrics such as inflation and GDP growth. In fact, if you have followed the financial press even briefly over the past couple of years, then you’ll know that the most popular topic among analysts and members of the press is the interest rate. The Federal Reserve has raised interest rates to levels last seen before the Great Recession of 2008, and this allows it to control consumer spending as credit becomes more expensive.
These high rates have already made their way to consumers as well. To understand the severity of this on consumer and credit card users, let’s take a look at data from the St. Louis Federal Reserve. The institution shares that the commercial bank interest rate on credit card plans for all accounts currently sits at an eye watering 21.59%. This is the highest level since the data was first compiled in 1994, underscoring the significant stress that consumers are facing right now even as analysts and politicians cheer robust U.S. economic growth throughout 2023 and the first quarter of 2024.
Higher interest rates, as some of you might be aware, mean that while the borrowers might struggle with high credit costs, the lenders are quite happy to dole out as much money as they can. But before we get to what the credit card issuers are seeing in the market at a time when the U.S. economy continues to grow despite high interest rates, the American industry is also seeing other historic developments.
These come in the form of one of the biggest credit card issuers in America, Capital One Financial Corporation (NYSE:COF), seeking to buy out the digital bank Discover Financial Services (NYSE:DFS) for a $35.3 billion deal. Should the deal secure regulatory approval, then it will see Capital One become one of the biggest banks in the U.S., and it will also allow Discover to expand its scope and compete with two of the biggest credit card companies in the world, namely Mastercard Incorporated (NYSE:MA) and Visa Inc. (NYSE:V).
So, how are credit card companies faring in this era of record high interest rates? Well, here’s what the management of American Express Company (NYSE:AXP) had to say during its fourth quarter of 2024 earnings call:
Since 2021, we’ve delivered record annual revenues, increasing the scale of our business by over 40% in just two years from $42 billion to $61 billion in annual revenues — in revenues. Annual card spending over this period has increased 37% on an FX adjusted basis to a record $1.5 trillion. We’ve added about 25 million new proprietary card accounts over the last two years, and over 70% of these new accounts are coming into the franchise on fee-based products. With the growth and new accounts we’ve seen over the past few years, we now have a total of over 140 million cards running on our global network. Our focus on continuously innovating our value propositions to meet the needs of our customers is driving increased brand relevance across generations, including millennial and Gen Z consumers.
So, which states in the U.S. have the highest credit card debt in today’s era of high interest rates? Take a look below to find out.
Our Methodology
For our list of the U.S. states with the highest credit card debt, we used data from the Federal Reserve Bank of New York’s Center of Microeconomic Data’s State Level Household Debt Statistics 2003-2023 for Q4 2023 and picked out the 25 states that had the highest credit card debt balance per capita.
25 States With the Highest Credit Card Debt in the US
25. Pennsylvania
Credit Card Debt Balance per Capita: $3,720
Pennsylvania holds a central place in American history and politics. Its $974 billion GDP makes it not only one of the most prosperous states in America but also allows Pennsylvania to beat numerous countries with its economic output.
24. North Carolina
Credit Card Debt Balance per Capita: $3,720
North Carolina is a Southeastern U.S. state that is one of the top ten most populated states in America. It is one of the earliest states to join the Union, and the state also benefits from a strong industrial and agricultural base.
23. Minnesota
Credit Card Debt Balance per Capita: $3,740
Minnesota is located at the US border with Canada and it is a state that is known all over the U.S. for its forests and rivers. The region is known for its agricultural and mining economies.
22. Utah
Credit Card Debt Balance per Capita: $3,850
Utah is a Western American state that was one of the last to join the Union. While it is also one of the more sparsely populated areas in the U.S., the state ranks high in median household income.
21. Illinois
Credit Card Debt Balance per Capita: $3,910
Illinois is a Midwestern state that ranks high among the list of the ten most populated U.S. states. It has some of the highest rates of oil refining in America and strong agricultural and manufacturing sectors to boot.
20. Arizona
Credit Card Debt Balance per Capita: $4,040
Arizona is a Southwestern U.S. state that is the sixth largest in area. These days it is at the center of national attention due to multi billion dollar chip plants being set up by local and foreign companies after help from the U.S. government.
19. Rhode Island
Credit Card Debt Balance per Capita: $4,070
Rhode Island is one of the smallest U.S. states in terms of area. However, it is the second most densely populated American state.
18. Delaware
Credit Card Debt Balance per Capita: $4,120
Delaware is another small American state that ranks just above Rhode Island for its area. It has a sizeable presence of companies from all industries, ranging from banking to poultry.
17. New Hampshire
Credit Card Debt Balance per Capita: $4,140
New Hampshire is among the states that have the highest median income in America. However, its area also limits its economic output and places it low among other states.
16. Georgia
Credit Card Debt Balance per Capita: $4,180
Georgia is a Southeastern US state that was one of the first to accede to the Union. It is also one of the most populated and boasts a vibrant corporate sector made of big ticket names such as Coca Cola.
15. Texas
Credit Card Debt Balance per Capita: $4,200
Texas is the second largest state in America in terms of area. Energy and aerospace are among the biggest sectors in its economy, due to the presence of players like SpaceX.
14. Washington
Credit Card Debt Balance per Capita: $4,240
Washington is one of the most prosperous states in America which is among those with the highest incomes in America. Boeing, Amazon, Microsoft, and others are among some of the biggest firms in the region.
13. Massachusetts
Credit Card Debt Balance per Capita: $4,300
Massachusetts is one of the most populous and prosperous states in America. It is known for its vibrant healthcare and education industries.
12. Virginia
Credit Card Debt Balance per Capita: $4,390
Virginia, a Southeastern US state, is best known for the Pentagon and the associated firms that are part of the defense and government consulting/contracting industries.
11. California
Credit Card Debt Balance per Capita: $4,450
California is one of the most economically well off states in America due to the presence of the technology industry. This also lends the state some of the highest price levels in the U.S. and has also seen the exodus of high earners from regions such as San Francisco.
Click to continue reading and see 10 States With the Highest Credit Card Debt in the US.
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Disclosure. None. 25 States With the Highest Credit Card Debt in the US was initially published on Insider Monkey.
