Delaware’s credit card burden ranks 21st in nation

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Delaware, sometimes known as the credit card capital, the state ranks 21st when it comes from the debt load that comes from using the plastic.

A recent CardRatings study compared costs-of-living in all 50 states to the average credit card debt found that in most cases the higher the cost-of-living, the higher the credit card debt. This came, even when wages were scaled up to reflect the higher cost of living.

Delaware consumers had 16 percent of their debt coming from credit cards. Hawaii, which ranked first had a 26 percent figure.

People in more expensive states generally have $594 more credit card debt than those in less expensive states. After adjusting median income for cost-of-living and taxes, the debt load was 22 percent heavier in more expensive states.

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States such as Hawaii, California and Alaska with especially high costs of living had ratios of debt-to-adjusted income of around 20 percent or more, compared to the overall average of 15.9 percent.

Neighboring Maryland and New Jersey, rank fifth and sixth respectively in the report.

“It would seem that when the cost of living gets to be too much, people do make the mistake of turning to their credit cards to keep up their lifestyles or perhaps just to keep up with the Joneses,” stated Brooklyn Lowery, editor of CardRatings.com. “This, of course, only makes the problem worse as interest on credit card debt only adds to your monthly expenses.”

Among the 10 states with highest costs of living in the country, only Massachusetts avoided the list of highest debt as apercentage of income.

States with lower costs of living and lower incomes have lower average credit card debt. All 10 of the states with the lowest debt-to-income ratio enjoy costs-of-living below the national average.

The study also looked at the relationship between education and unemployment to credit card debt. States with high unemployment also had higher average credit card debt, suggesting that people do lean on credit cards to make ends meet when they are between jobs.

States with higher percentages of college graduates also showed higher credit card debt overall. States with high percentages of college graduates had an average credit card balance $573 greater than states with lower percentages. The percentage of debt burden in states with higher levels of college grads was more than 16 percent higher.

“This trend could be indicative of the long-term effects of student loan debt,” Lowery said. “Young people might find themselves using their credit cards to make up for income lost to student loan payments. Certainly, this could create even more debt over time as credit card debt is generally much more expensive than student loans.”

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