As the COVID-19 pandemic spread, many Americans struggled to make ends meet without a weekly salary after mass layoffs at the start of the pandemic. Although increased unemployment benefits helped for a time, households still had to pay for goods and other expenses with less money. Many then turned to credit cards to make up the difference between the rising cost of living and falling income.
Credit card balances collectively reached $856 billion in the fourth quarter of 2021, an increase of $52 billion from $804 billion in the third quarter, the Federal Reserve Bank of New York reports. Despite the increase in Federal Reserve banknotes, credit card balances are $71 billion lower than at the end of 2019. (Here are the states where debt is rising the most during COVID-19.)
Including both banking and retail plastics, credit card debt averaged $6,569 per cardholder with outstanding balances in the fourth quarter of 2020, according to Credit Card Debt Statistics 2022 from the loan tree. And just like housing costs and gas prices, credit card debt varies by state.
To determine the states with the most credit card debt, 24/7 Wall St. reviewed the Lending Tree report. States were ranked by average credit card debt per cardholder, using data from 2021 credit reports.
New Jersey residents carried the most credit card debt with an average of $7,872 per cardholder. But other states in the northeast and mid-Atlantic also have residents with high outstanding balances. Connecticut came in at No. 2 with an average debt per cardholder of $7,721, and the average debt at No. 3 Maryland is $7,464.
Meanwhile, Kentuckians are living relatively debt-free with an average outstanding credit card balance of $5,441, nearly $2,500 less than cardholders in New Jersey. The disparity could be attributed to the higher cost of living in the Garden State. According to a 24/7 study on Wall St., the cost of living in New Jersey is 15% higher than the national average, while the cost of living in Kentucky is 7% lower on average. (Here are the most expensive states to live in.)
Click here to see the states with the most credit card debt