By now, word has spread that Americans reduced their credit card debt by 11% in 2011. But are there any states that fare better than others? Which states have the lowest credit card debt? And what does this say for the overall economy?
Because the collective credit card debt has historically been an accurate measure of how well (or poorly) the economy is faring, many analysts are using it as proof that the economy continues to strengthen. Others, however, insist the lower debt is due to a lowered consumer confidence.
It comes as little surprise, then, that the wealthiest states are home to those with the highest average credit card balances; therefore, the poorer states have lower credit card balances. But there might be other factors at play.
Frugality
Three of the bottom five states in terms of credit card debt are first, located in the southeast region of the country. They’re also considered by U.S. News & World Report to be the most frugal.
Southern States
Louisiana is one of those states that is considered poor – and it’s also the fifth lowest in terms of credit card debt. With an average balance of just more than $5,800, the average credit score is 635, which ranks the third lowest in the nation.
Alabama comes in at number four in terms of credit card balances with an average of $5,770. It’s considered the most frugal state, too. Still, with an average credit rating of 637, it comes in at number 5 in those rankings. It is also one of the more poorer states.
Next up, Mississippi has an average credit card debt of $5,856 with a median household income of $42,500 – the tenth lowest in the nation. Its average credit score comes in at 635 and it too is high on frugality factor.
Wisconsin
Finally, Wisconsin has the lowest average credit card debt in the country – again, it’s all due to the frugal nature of the state’s residents. Its median income is higher than its southern counterparts, too. Its residents just seem to have a better grasp on their respective credit card balances, as well as their credit scores, which is the nation’s 14th highest.
Whether it’s signs of brighter financial days or a lack of consumer confidence, there’s no denying these lower credit card balances are a good thing for consumers around the nation. Time will tell, however, whether this is a long term trend or a brief reprieve.
