Smart Borrower Blog

Top 5 Best and Worst States at Managing Debt


Sep 19th, 2018 @ 9:57 PM by Amber Nelson


Researchers have found a wide spread between the states where residents pay off their debts well versus those that don’t. Financial website Credible conducted a survey of over 540,000 borrowers from across all 50 U.S. states and found that credit card bills and student loans along with high housing costs are what keep many Americans from being able to pay off their debts better.

On the list of the top five worst states in terms of personal debt management were Hawaii, Washington, Colorado, Oregon and Montana. Hawaii faces unique challenges in that they have some of the highest overall costs of living in the nation. “Residents of Hawaii pay the second highest amount on monthly credit card bills and fourth highest amount on housing costs,” says Credible, “and their average income isn’t high enough to offset those costs.” Hawaiians pay 36.2% of their monthly income toward credit cards, student loans and housing.

Credible found that the national monthly average debt load for American credit cards is $207, $370 for student loans and $906 on rent or mortgage. For almost all of the worst five states, their average student loans payments and housing payments were higher than the national average. Montana was the exception, but its average income level was much lower than the other states.

On the other end, the top five states that are best as paying down their debts are Michigan, Arkansas, Delaware, Kentucky and Missouri. For national leader Michigan, Credible commented that, “low average monthly housing payments relative to average income (combined with lower than average credit card and student loan payments) push the state up the rankings.” Residents of Michigan pay just 25.3% of their monthly income toward housing, credit cards and student loans. And the other states on the list all have average housing costs that are significantly lower than the national monthly average.

Credible cautions consumers that there is obviously a huge range of debt management responsibility within in each state. “While this new ranking sheds light on how residents of various states perform in terms of debt management, keep in mind that these are average numbers — and that your debt is a personal matter.”

About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.

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