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Total household debt has hit all-time highs as Americans grapple with high inflation and rising interest rates. Read on for the highest-debt states.
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Debt can be a heavy burden for most Americans, and with higher interest rates and cost of living, more people are struggling to make ends meet. While debt is common across the country, some states have higher levels of debt than others, as found by a recent LendingTree survey.
Total household debt hits all-time high
The latest report from the Federal Reserve Bank of New York reveals that in the first quarter of 2023, there was an uptick in total household debt — it reached $17.05 trillion, representing a $148 billion (0.9%) increase. To put things into perspective, this is $2.9 trillion higher than pre-pandemic levels at the end of 2019.
There has also been an increase in the number of delinquencies of most debt types. Specifically, credit card and auto loan delinquencies have seen an increase of 0.6% and 0.2%, respectively, bringing them near or above their pre-pandemic levels.
States with the most debt
LendingTree’s research team scrutinized over 370,000 anonymous credit reports to determine the states with the largest and the smallest non-mortgage debts. The study measured non-mortgage debt, including auto loans, credit cards, personal loans, and other types of debt, as of the start of 2023.
Georgia residents are carrying the highest average non-mortgage debt in the entire nation at $45,778. This placed Georgia just ahead of states like Maryland ($45,663) and Texas ($44,850).
Unfortunately, Georgia residents also have a lower median household income of $65,030, which falls below the national average of $69,021. On top of that, the state’s average VantageScore credit score also is below the U.S. average, measuring at 676 compared to 696.
Despite a significant median household income of $91,431, Maryland has the second most non-mortgage debt. This is due to Maryland’s high cost of living. The state’s overall cost of living is 24% higher than the national average, leaving Maryland ranked as the seventh-most expensive state to live in.
States with the least debt
On the other end of the spectrum, residents of Minnesota have the lowest average non-mortgage debt. Their average amount owed is $35,201. This puts them below other states with low debt levels like Oregon ($35,249) and Indiana ($36,001).
Household incomes for states with lower average non-mortgage debt tend to be higher, with Minnesota ($77,706) and Oregon ($70,084) leading among the bottom three. Indiana is an exception with a median income of $61,944, which is lower than the national average of $69,021.
How to pay off your debt fast
Paying off debt can feel overwhelming, but there are options available to help you achieve financial freedom. One approach to consider is a 0% balance transfer credit card. This type of card allows you to transfer your existing debt to it, and for a certain introductory period, you won’t accrue any interest as you work to pay down your balance. Make sure you don’t rack up more debt after transferring yours to one of these cards.
Another option is a debt consolidation loan, which allows you to combine all your debt into one manageable payment. This can help streamline payments and reduce the interest you’re paying.
Budgeting is also a crucial step in paying off debt. Analyze your spending habits and create a plan to allocate more money towards your debt each month.
Lastly, explore different debt payoff methods, such as the snowball or avalanche method, to see what works best for your situation. With these tips, paying off debt can become a feasible and achievable goal.
With the right tools and resources, you can manage your debt and move toward financial freedom. Consider speaking with a financial advisor, exploring debt management programs, or refinancing your high-interest loans as practical steps to help lower your debt. Remember, it’s never too late to take control of your finances.
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