American consumers are paying down personal debt at a record pace during the coronavirus pandemic. Consumers paid down approximately $118 billion in debt through June, as COVID-19 and rising unemployment led many to reduce costs and eliminate debt.
Many financial experts predict that 2020 will be the first time in over a decade that Americans will exit the year with less credit card debt than they started with. The last time consumers ended the year with less credit card debt than they held in January was in 2009, just after the Great Recession.
Which States Have Paid Off the Most Debt?
While Americans across the country are repaying credit card debt at record levels, some states are performing better than others:
- Alaska: $663 average debt repayment
- Hawaii: $647 average debt repayment
- Virginia: $565 average debt repayment
- California: $558 average debt repayment
- Maryland: $552 average debt repayment
- Texas: $550 average debt repayment
- New Jersey: $532 average debt repayment
- Georgia: $527 average debt repayment
- Florida: $515 average debt repayment
- New York: $512 average debt repayment
Which States Are Adding the Most Debt?
While many consumers are repaying debt at record levels, others are adding to their credit card debt pile. States in New England and the American West are significantly impacted, with states from both areas adding the most debt in 2020:
- Vermont: $368 average added to debt load
- Wyoming: $437 average added to debt load
- North Dakota: $392 average added to debt load
- South Dakota: $403 average added to debt load
- Alaska: $663 average added to debt load
- Delaware: $489 average added to debt load
- Montana: $425 average added to debt load
- Rhode Island: $451 average added to debt load
- Maine: $396 average added to debt load
- New Hampshire: 476 average added to debt load
How to Tackle Debt During Economic Uncertainty
In times of uncertainty, such as the COVID-19 pandemic, reducing credit card debt might seem impossible. Fortunately, there are practical steps consumers can take to eliminate debts.
One of the easiest ways to tackle debt is by refinancing cards with high interest rates through personal loans, balance transfer credit cards, or renegotiating APRs with card issuers. Balance transfer credit cards provide the most straightforward route, as they often feature an extended 0% intro APR offer that allows cardholders to combine balances, pay them off interest-free, and reduce monthly payments.
Related Article: Paying Off Debt: Debt Avalanche vs. Debt Snowball
Budgeting is another excellent way to tackle problematic credit card debt. Some simple budgeting tips that can have quick results include:
- Streamlining finances by reducing non-essential spending
- Calculate your expenses before the month begins and compare the actual results once the month is over
- Anticipate unforeseen circumstances with an emergency fund
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