Colorado ranks 10th in the nation for least sustainable credit card debt, according to a new report from WalletHub out today.
Americans started 2022 with more than $ 1 trillion in credit card debt, and WalletHub drew on data from TransUnion, the Federal Reserve, the US Census Bureau and WalletHub’s proprietary credit card payoff calculator to determine the cost and time required to repay the median credit card balance in each of the 50 states and the District of Columbia.
The States with the Highest & Lowest Credit Card Debts Report showed Coloradans:
• have a median credit card balance of $ 2,646
• have a median income of $ 53,517
• will pay $ 251 in interest until they pay off their balance
• face an average payoff time frame of 13 months and 25 days
Alaska’s credit card debt is most unsustainable, with residents carrying a median credit card debt of $ 3,206 and facing a payoff time frame of 17 months and 27 days.
Mississippi’s payoff time frame is shortest at 9 months and 18 days.
Harvard Business School Professor Rosabeth Moss Kanter listed reasons people get into trouble with credit cards. “One is a failure to notice how the debt is piling up, along with a failure to calculate the costs of increasing debt, ”she said. “Another is taking the easy credit offers and becoming dependent on too many credit cards, while letting interest charges accumulate which begin to take a higher and higher proportion of income.”
Experts say there are a few – very few – situations where going into credit card debt is OK.
“The only time it is worth it to accumulate revolving debt on a credit card is if it is a true emergency,” said Monmouth University professor Robert Haywood Scott III. “If you need a critical medication and have to charge it and find a way to pay later, then that’s debt worth accumulating. Or if your car needs necessary repairs and without your car, you will not be able to work then charging the repairs on a card (one hopefully with no or low interest and fees) is unavoidable. Then it is important to pay it off as soon as is reasonable.
“Accumulating debt in these scenarios is a common occurrence. And, honestly, as an economist who studies debt, I believe credit cards play a valuable role for people to maintain security. For example, if you did not have access to a credit card and that $ 2,000 car repair was impossible for you to pay then you might lose your job or go to desperate extremes to get the money. Instead, people can charge the expense and formulate a plan going forward to pay it off. This is not a terrible thing. “