BACK

franckreporter / E+ / Getty Images

Debt

Americans’ debt burden a little lighter this year, survey shows

In the midst of a pandemic and a recession, consumers have found ways to pay down credit card debt

Summary

The national average card debt fell 6% and the median household income rose 6% compared with last year, a new CreditCards.com survey finds. Among U.S. states, Louisiana shoulders the biggest debt burden, while Massachusetts has the lightest load.

The content on this page is accurate as of the posting date; however, some of our partner offers may have expired. Please review our list of best credit cards, or use our CardMatch™ tool to find cards matched to your needs.

There’s no doubt 2020 has put us through the wringer: We’ve faced a pandemic that brought a big recession and record U.S. unemployment.

But there’s a sliver of good news: Credit card debt is down.

The national average card debt fell 6% and the median household income rose 6% compared with last year, a new CreditCards.com survey found. The State of Debt survey looks at debt and income across the country to see which states carry the heftiest – and lightest – debt loads.

This year, Louisiana takes the No. 1 spot for biggest debt load, up from No. 2 last year. And Mississippi comes in second this year, up from fifth place last year. As in 2019, southern states are shouldering the most onerous debt burdens. In fact, 13 of the 14 states with the highest debt burdens are in the region defined by the U.S. Census as the South.

At the bottom of the list, Massachusetts has the smallest credit card debt burden for the third year in a row, while Washington, D.C. boasts the second-lowest debt load.

To determine debt load, CreditCards.com looked at the average card debt owed, based on data from Experian, as well as median household income in each state. We then calculated how long it would take to get out of debt in each state by paying 15% of gross monthly income toward card balances. (See methodology.)

But no matter which state you call home, you might have a tougher time getting out of debt this year. That’s because two of the most popular debt payoff tools, balance transfers and personal loans, have become much harder to obtain over the past year, says CreditCards.com industry analyst Ted Rossman.

“Right now, getting out of credit card debt is mostly on you,” he says.

See related: 3 best strategies for paying off credit card debt

Higher earnings mean lighter debt load in many states

One of the biggest factors affecting a state’s rankings for debt load: the median income. It’s simply faster and easier to get out of debt when you have more money flowing into your bank account.

A prime example: the state with the lightest debt burden, Massachusetts, also has the third-highest median household income in the country. And the place with the second lowest debt load, Washington, D.C., has the highest median household income at $92,266 a year.

In contrast, the states with the heaviest debt burdens all rank in the bottom 10 in terms of median household income. Here are the five states with the biggest debt loads in 2020:

  1. Louisiana – up from second place last year with an income rank of 48th
  2. Mississippi – up from the fifth spot last year and in last place (51st) for income
  3. Oklahoma – up from sixth place last year and 44th in income rankings
  4. Alabama – up from the eighth spot last year and 47th for income
  5. Arkansas – down from fourth place last year and 49th in terms of income

Texas and Georgia both rose up the list to join the top 10 states with the heaviest debt burdens this year, while Florida fell to number 11, down from seventh place last year.

Just as we’ve seen in past years, all states with high debt loads have middling credit card balances paired with lower median incomes that add to the challenge – and extend the timeline – for paying down debt.

But Wisconsin and Minnesota stand out among the states with the lightest debt loads because they have middle-of-the-pack incomes but very low card balances. In fact, Wisconsin is No. 22 in terms of income but lowest (51st) in terms of card debt owed. So, low debt is the primary reason that state fared so well in the debt burden ranking.

Other states in the bottom five are Minnesota at fourth-lowest debt load, down from third-lowest last year, and Utah at fifth lowest, dropping from fourth lowest last year. California, New Jersey and Washington are other big states among the 10 lowest debt burdens.

Overall, the credit card share of total debt outstanding has fallen fairly significantly since the pandemic started, says Scott Hoyt, senior director at Moody’s Analytics.

“Borrowing has fallen fairly significantly. But it’s hard to tell from the data we have how much the decline is from repayment and how much it’s just from people not borrowing because they’re not spending,” he says.

Highest credit card debt burden states

2020 rankStateTotal credit card balanceMedian annual household incomeMonths to pay offTotal interest paid
1Louisiana$7,940$51,07315$1,013
2Mississippi$7,367$45,79215$977
3Oklahoma$8,094$54,44914$984
4Alabama$7,803$51,73414$964
5Arkansas$7,571$48,95214$960

A silver lining: Help is available in a crisis

One of the most noteworthy findings in this year’s poll is that the crisis didn’t cause consumers overall to fall further into debt. In fact, the average credit card debt actually went down.

This bit of good news can be attributed partly due to stimulus payments, the extra $600 a week in unemployment benefits (which expired at the end of July) and other relief from the U.S. federal government, along with a proactive approach by creditors, says Michael Bovee, debt expert and founder of the Consumer Recovery Network.

Most major credit card issuers responded quickly to the pandemic and the ensuing rise in U.S. unemployment by offering COVID-19 credit card debt relief. For example, American Express offered hardship relief for as long as 60 months. And Capital One offered to defer payments and waive fees for some cardholders.

Consumers also were able to get deferrals on auto loans and mortgages, Bovee points out. In fact, some deferred these loan payments and used the extra money that freed up to pay down debt, he says.

This approach from the government and lenders has created a vastly different experience from past recessions like the 2008 Great Recession led by the subprime mortgage crisis, Bovee points out. Consumers had more help this time around.

“As an example, somebody in Louisiana or Mississippi may have found that extra unemployment helped them to pay their expenses, not fall behind and even pay their debt down as a result of some of that extra money,” Bovee says.

See related: 10 tips for handling your credit during the COVID crisis

Lowest credit card debt burden states

2020 rankStateTotal credit card balanceMedian annual household incomeMonths to pay offTotal interest paid
47Utah$7,482$75,7809$599
48Minnesota$7,114$74,5939$550
49Wisconsin$6,504$64,1689$534
50Washington, D.C.$8,227$92,2668$596
51Massachusetts$7,506$85,8438$534

How to get out of debt in a crisis

Getting out of debt in 2020 with a pandemic and economic crisis still raging may be harder than normal, but there is help available. Here are six tips for getting control of your debt no matter where you live:

1. Make an aggressive repayment plan

Pay a lot more than the minimum required payment if at all possible.

“If you make your state’s median household income and are able to buckle down and put 15% of your income toward your credit card debt, your debt will be completely gone within eight to 15 months, Rossman points out. “That’s powerful motivation.”

2. Put cash you’re not spending toward debt

While some households are spending more on groceries and other items during the pandemic, average weekly household spending on credit cards fell by an average of 40% by the end of March 2020, according to research from JPMorgan Chase.

This decrease was more due to pandemic behavior changes than income loss, according to Chase. If you spent a certain amount on restaurants or travel before the pandemic, consider funneling some of that, if you’re able, to debt repayment.

3. Reap your unused rewards

Do you have a rewards credit card? If you’re sitting on a pile of unused points, consider turning them into cash back and putting them toward debt repayment. While not normally considered the wisest use of points and miles, these are not normal times.

“It might make sense to turn your rewards into cash in an environment where you’re not going to be able to take that trip you planned,” Bovee says.

4. Consider putting windfalls toward debt

No one knows yet if or when Congress will pass legislation to give Americans a second stimulus payment, or for how much.

But it’s worth considering putting future windfalls such as any additional stimulus payments toward debt or socking them into savings to cushion you from future financial emergencies that you’d otherwise put on a card, if you don’t have enough in the bank.

5. Ask your creditors for help

Major credit card issuers and other lenders are offering programs to help consumers who are struggling due to the pandemic and related job loss. These may include deferred or lowered payments, reduced interest rates and waived late fees.

First, call your card issuer to request financial assistance. Some issuers may ask you to file a request via an app or online due to longer wait times, according to the CFPB.

“Take advantage of every single opportunity that you have to defer a loan when it makes sense for your situation,” Bovee says.

6. Sign up for credit counseling

You can also turn to a nonprofit credit counseling agency. These organizations offer debt management programs that can help you get lower interest rates and better payment terms from your creditors. Nearly all agencies offer phone and virtual credit counseling, a huge benefit in a pandemic.

“I typically suggest people talk to a nonprofit credit counseling agency if they’re running out of money before they run out of month,” Bovee says.

See related: What is credit counseling, and how can it help you? 

COVID relief programs may stick around post-crisis

One good thing to come out of this crisis: Bovee predicts lenders will continue to use programs they introduced during the pandemic to help consumers who need help in the future.

“If two years from now the pandemic is over and a pocket of job loss happens in North Dakota, you’re in a situation now where banks have used these tools,” he says. “And I think that they’ll carry forward.”

Survey methodology

CreditCards.com calculated payoff times and interest charges using the average credit card debt per bank and retail cardholder (according to Experian) and the median household income (courtesy of the U.S. Census) in each state. CreditCards.com assumed that 15% of gross monthly income would go toward credit card debt. For the average credit card interest rate, CreditCards.com used 19.67%, the average midpoint of the APR ranges the site measured on 100 popular cards in mid-October.

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

What’s up next?

In Debt

Holiday shopping season off to a slow start in 2020

The average shopper spent 14% less from Thanksgiving Day through Cyber Monday, compared with the same period in 2019, according to the National Retail Federation. With COVID still raging, it’s no surprise that consumers have been shy to spend freely.

See more stories
Credit Card Rate Report
Business
14.22%
Airline
15.51%
Cash Back
16.10%
Reward
15.90%
Student
16.78%

Questions or comments?

Contact us

Editorial corrections policies

Learn more