Maryland Ranks 15th Among the States With the Longest Credit Card Debt Payoff Timelines
Median Credit Card Balance Can Take More Than a Year to Pay Off.
WASHINGTON — With Americans projected to increase their collective credit card debt by $120 billion this year, and the grand total at nearly $1.3 trillion, the personal-finance website WalletHub today released its report on the States Where It Will Take the Longest to Pay Off Credit Card Debt, as well as expert commentary. Alongside this report, WalletHub also released its Financial Insecurity Survey, which examined the connection between people’s financial self-image and their mental health.
To determine the time and cost required to repay the median credit card balance in each of the 50 states and the District of Columbia, we drew upon data from TransUnion, the Federal Reserve, and the U.S. Census Bureau, then used WalletHub’s proprietary credit card payoff calculator.
Credit Card Debt in Maryland (1st Rank = Longest Payoff Timeline):
- Overall Rank: 15th
- Median Credit-Card Balance ($3,152)
- Median Income ($70,987)
- Cost of Interest Until Payoff (-$394)
- Expected Payoff Timeline (13 months and 4 days)
“Looking at the median credit card debt in a state can give you a good idea of whether people are struggling or doing well compared to people in other states. However, it’s also important to look at how much residents put toward paying their debts off each month. Low average payments lead to long payoff timelines, which in turn lead to high amounts of interest accrued. For example, Vermont’s median credit card debt is relatively low, but it ranks as the state with the third-biggest debt problem due to low average monthly payments.”
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“Alaska is the state with the biggest credit card debt problem, with the median amount per person reaching $3,859. Given that the average person in Alaska pays $259 toward their credit card bill each month, it would take more than 17 months to pay off their entire debt, and they would pay $635 in interest.” – Cassandra Happe, WalletHub Analyst
Key takeaways and expert commentary are included below in text and video format.
Expert Commentary
What daily behaviors lead people to amass credit card debt?
“Several daily behaviors can contribute to the accumulation of credit card debt. Habitual overspending, often driven by impulse purchases, can significantly increase debt levels. People may not track their spending or may justify small purchases that add up over time. Additionally, relying on credit cards for essential expenses without a clear repayment plan can lead to debt accumulation. Another contributing factor is the lack of a budget. Without a clear budget, individuals might spend beyond their means, using credit cards to cover the shortfall. Finally, high-interest rates on unpaid credit card balances can quickly escalate debt if not managed properly.”
Jill Channing, Ph.D. – Associate Professor and Associate Director, Department of Educational Leadership and Policy Analysis, East Tennessee State University
“Using a credit card without considering one’s spending plan and recognizing that each time used the balance due is increasing. If the total balance due is not paid, the credit card balance now is having interest added and interest usually is in the 20+% range. Debt grows if the account holder does not pay the entire balance or an amount larger than the minimum balance due shown on their statement. If 2 or more cards are being used – the challenges are increased. If one is using a card to accumulate points or miles and not paying the full balance due each month, the value of the points or miles is not a benefit. It is a cost.”
Carole Makela – Professor, Colorado State University
What are three easy steps a person should take in order to become debt-free?
“Becoming debt-free requires a clear strategy and disciplined approach. For starters, one should create a detailed budget. This involves listing all sources of income and tracking every expense to understand where an individual’s money is going. By doing this, one can search for discretionary spending that can be reduced or eliminated to free up more money for debt repayment. Second, prioritizing and developing an adequate strategy for debt repayment is key. Someone may focus on paying off the smallest debt first while making minimum payments on others. Once the smallest debt is paid off, move to the next smallest. Or possibly use the additional income to make extra payments towards the highest priority debt to accelerate the repayment process. Whichever approach is taken, it must fit into the financial budget and goals of the individual. Lastly, one must build and maintain financial discipline to avoid new debt while in a repayment strategy.”
Juan E. Gallardo, Ph.D. – Director, Texan Smart Financial Education Center; Instructor, Tarleton State University
“First, reduce your impulse purchases by implementing waiting periods or other commitment devices to address self-control failures. Second, make sure you are living within your means by budgeting, making sure you do not have any zombie subscriptions (e.g., streaming, gyms that you do not use), and cooking at home more. Third, you have to be paying enough toward your credit card debt so that you are actually on a path to a zero balance – use online calculators to make sure!”
Daniel Villanova, Ph.D. – Assistant Professor; Doctoral Program Director, Department of Marketing, University of Arkansas
What steps can a person take to be better prepared for unpredicted financial difficulties?
“Building an emergency fund with at least three to six months’ living expenses provides a safety net for unexpected costs. Adequate health, auto, home, and life insurance protects against significant financial setbacks. Diversifying income streams reduces reliance on a single pay check, and regularly reviewing finances ensures preparedness for any changes in financial situations.”
Richard Roberts – Professor, Monmouth University
“Since an unexpected expense can be the difference between chugging along on-budget or unleashing a debt spiral, having a rainy-day fund can be crucial for getting you through without having to resort to unsustainable credit card debt. You need to have consistent monthly budget slack to build those savings, and to have that slack you need to be living within your means. It is easier said than done, but the bottom line is that you need to be making more money than you spend so you can put your debts on a sustainable path, build savings, and be prepared for unexpected events.”
Daniel Villanova, Ph.D. – Assistant Professor; Doctoral Program Director, Department of Marketing, University of Arkansas
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