The most debt-free states in America

By Christine DiGangi 6 hours ago

 

Credit card spending typically spikes in the fourth quarter, and 2013 was no different, but it seems Americans were a little more conservative with their credit card spending than they were at the end of 2012. The average balance per cardholder declined in nearly every state, according to fourth-quarter data from the past two years.

Nationwide, credit cardholders had an average balance of $3,799 at the end of 2013, which is down from the $3,852 average in the fourth quarter of 2012, according to data from Experian-Oliver Wyman Market Intelligence Reports and Experian’s IntelliView tool.

Keeping a low credit card balance is an important factor in maintaining or improving your credit score .

 Keep in mind this data looks only at average balances, not how those balances compare to the overall available credit these consumers have, so high average balances don’t necessarily mean the cardholders have high credit utilization rates .

 It’s a good idea to keep that balance as small a portion of your available credit as possible, ideally less than 30%, but lower is even better.

Still, high credit card balances can be both expensive and stressful, particularly if you can’t pay the balance immediately. With a 16% interest rate, a $4,000 balance will cost a consumer roughly $640 a year in interest. If the consumer pays only the minimum payment each month, it can take 20 years to pay off, and cost nearly $4,800 in interest.

There wasn’t much change in credit card debt levels year over year, but Michigan moved into the top 10 (and West Virginia moved out, from No. 9 to No. 13). Here are the states with the lowest average credit card balances, the most debt-free states:

 

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