People in New Hampshire owe twice as much in credit-card debt, car loans and the like as those in Oklahoma. How do your state's debtors stack up?
By Hilary Smith
Theres something about New England that makes people spend, spend, spend.
According to data compiled from approximately 3 million consumers by credit-reporting agency Experian, New Hampshire, Connecticut and Rhode Island have the highest average overall debt in the nation. As of March, the average debt for people living in these states totaled $16,845, $15,314 and $14,643, respectively. Massachusetts, Maine and Delaware followed closely behind.
Experian classifies debt as everything present on a credit report, including revolving and most installment debt. Revolving debt includes money you would owe on standard bank and retail-store credit cards, where the creditor sets your monthly payment based on the current balance. Installment debt is money you would owe to a creditor who expects repayment over a set period of time in equal monthly amounts, such as a car loan.
Experians data exclude mortgages.
At the bottom of the list with the least amount of debt are people living in Mississippi, Washington, D.C., and Oklahoma. Their state debt averages came in at roughly half those of the more northerly states at $8,420, $8,655 and $8,823, respectively.
So where does your state rank? Check out our interactive debt map to find out.
Debt peaks in middle age
Nationwide, the 50-59 age group had the highest average debt with $20,157, while the over-70 group held the lowest average debt with $6,500, Experian said.
The numbers follow a sensible cycle, says Samah Haggag, manager of analytics for Experian. As our age increases, people are out making purchases and building their lifestyle. Debt increases gradually over time and tapers off when they hit retirement age. This is what we were expecting to see.
| Average debt by age group in the U.S. | | Age | Debt | Age | Debt | | 18-29 | $8,636 | 50-59 | $20,157 | | 30-39 | $16,298 | 60-69 | $15,964 | | 40-49 | $18,659 | 70+ | $6,500 |
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Source: Experian (www.NationalScoreIndex.com)
In New England and other areas, particularly on the coasts, Haggag speculates that higher costs of living are a significant contributing factor to the higher debt loads, as compared to debt loads in the South and Midwest.
According to CardWeb.com, which tracks the credit and debit card industry, average U.S. credit-card debt per household nearly tripled over a 10-year period, from $3,646 in 1993 to $9,205 in 2003 (the most recent data available).
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Low mortgage rates and the ever-increasing availability of credit also are making it easier for consumers to spend now and pay later, especially on items that many once considered only rare luxuries. The Federal Reserve reports that Americans spend half their money from refinancing on expenses such as vacations and home improvements.
Large debt not a credit-killer
Dont be too quick to condemn the heavily indebted, however. Carrying around a hefty debt load does not necessarily equate to a bad credit score. Haggag notes that consumers who have higher-than-average debt also have better-than-average credit scores. These consumers often have more access to credit, increasing their opportunities to incur more debt.
For example, Experian found that consumers in Massachusetts have the fourth-highest overall average debt load at $14,601, but they also have the fifth-highest average credit score at 702, just a few points behind top-ranking South Dakota.
Just because someone has a large amount of debt doesnt mean they will have a low credit score, she says. Managing debt is crucial to earning and maintaining a good credit score.
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