Home > Managing Debt > The Most Debt-Free States in America

Comments 4 Comments

Keep your credit card balances low and you’ll not only save money on interest, but you’ll probably sleep better at night as well. By that measure, residents of Iowa should be getting a good night’s sleep. According to data from Experian-Oliver Wyman Market Intelligence Reports and Experian’s IntelliView tool, Iowans carry the lowest average credit card balance per consumer in the U.S. with an average balance of $2,904, as of the second quarter of 2013.

Close behind Iowa was North Dakota, where the average total credit card balance was $2,971, followed by Utah ($3,014), South Dakota ($3,168), Wisconsin ($3,204), Idaho ($3,225), Nebraska ($3,326), Montana ($3,408), West Virginia ($3,411) and Kentucky ($3,424).

Here are the rankings at a glance:

10. Kentucky ($3,424)
9. West Virginia ($3,411)
8. Montana ($3,408)
7. Nebraska ($3,326)
6. Idaho ($3,225)
5. Wisconsin ($3,204)
4. South Dakota ($3,168)
3. Utah ($3,014)
2. North Dakota ($2,971)
1. Iowa ($2,904)

Some of these states were featured in Credit.com’s previous analysis of states that would lead the housing recovery, due to a combination of high credit scores, and low numbers of severely delinquent mortgages and foreclosure inventory, among other factors. States that ranked high in that survey and this one include North Dakota, South Dakota, Nebraska and Montana.

Long Way to Go

On the other end of the spectrum, the state with the highest average credit card balance is Alaska, where residents carry an average credit card balance of $4,706. New Jersey citizens are close behind with an average balance of $4,523. Other states with the largest average balance include Connecticut ($4,420), Maryland ($4,311) and Delaware ($4,296).

In a recent Credit.com survey, 23% of respondents said the American Dream means being debt-free. This data shows that in many parts of the country, we have a long way to go.

High credit card balances can be expensive. With a 16% interest rate, a $4,000 balance will cost a consumer roughly $640 a year in interest. If the consumer pays only the minimum payment each month, it can take 20 years to pay off, and cost nearly $4,800 in interest.

In addition, high credit card balances can hurt credit scores. One important factor in calculating credit scores is the amount of debt the consumer carries. Among other things, that factor takes into account how close the borrower’s balance is to his or her credit limit. (This is called the utilization ratio.) A high utilization can lower a consumer’s credit scores, and make it more difficult to consolidate debt at a low interest rate.

You can see how your credit card debt impacts your credit score, as well as compare your debt to what other Americans carry, using Credit.com’s free Credit Report Card. You’ll get your credit score, as well as a snapshot of how your debt compares to the national average.

For those who are having trouble paying off credit card debt, there are a variety of free and low-cost debt-reduction services that can help, including online money management programs and credit counseling.

Image: Photodisc

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

  • Pingback: The Most Debt-Free States in America | Credit.com Blog | Totally Inspired Mind-Where Positive Minds Congregate()

  • steve me

    i think the recovery might be falling again, govt at a stand still, foreclosures still going on

  • 3genUte

    A bit distorted by cost of living- all of those states have low cost of living compared to NY, FLA, CA, etc. If your income is twice that of the average Iowan, then 2X more debt is not any “worse”.

  • Astrid

    As a 61 year old widow receiving survivor’s state pension, I wonder if it will stop when I turn 67 or 70 or until my death? (State of California)

  • Michelle

    Great article – I would like to know where California falls in this list. Thanks!

  • Pingback: Tuesday’s need-to-know money news()

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team