Americans started 2021 with nearly $900 billion in credit card debt. And that amount is projected to increase by $60 billion by the end of the year, according to WalletHub, a personal finance website.
To determine the states with the highest and lowest amounts of credit card debt, WalletHub looked at average credit card balances and payments made since September 2020, using data from credit reporting agency TransUnion, the Federal Reserve and the U.S. Census Bureau.
After compiling the typical monthly payments Americans across all 50 U.S. states make toward their debt, WalletHub estimated how long it would take for an individual to pay off their remaining credit card balance, including finance charges, using the site's own credit card payoff calculator.
Some states, like Montana, Colorado and New Hampshire, seem to be more prone to debt than others.
That could be due to "a combination of several factors," WalletHub analyst Jill Gonzalez tells CNBC Make It. "Those factors include how financially literate residents are to how much a state has been affected by the pandemic to how high the cost of living is."
Factors like unemployment and health-care emergencies have also affected debt levels over the past couple of years, Gonzalez says.
Check out the 10 states where individuals owe the most on their credit card balances, including an estimated timeframe for paying that debt off:
- Median credit card debt: $2,111
- Time until payoff: 12 months and 17 days
- Median credit card debt: $2,022
- Time until payoff: 12 months and 19 days
- Median credit card debt: $2,058
- Time until payoff: 12 months and 26 days
- Median credit card debt: $2,236
- Time until payoff: 13 months and 1 day
- Median credit card debt: $2,186
- Time until payoff: 13 months and 10 days
- Median credit card debt: $2,001
- Time until payoff: 13 months and 13 days
- Median credit card debt: $1,850
- Time until payoff: 14 months and 7 days
- Median credit card debt: $2,576
- Time until payoff: 14 months and 11 days
- Median credit card debt $2,249
- Time until payoff: 14 months and 23 days
- Median credit card debt: $2,839
- Time until payoff: 15 months and 8 days
If you're aiming to pay down your credit card debt, there are two common strategies to follow: the avalanche method and the snowball method.
With the avalanche method, you pay as much as you can on the debt with the highest interest rate while making minimum payments on your other credit cards. "This method will help you pay less interest over time and could shorten the amount of time it takes to get out of debt," Gonzalez says.
However, this method requires a lot of discipline and commitment in order to streamline all your extra cash into one area of debt, Gonzalez says.
With the snowball method, you pay off the smallest debt amount first, regardless of interest rate, then move on to the second-smallest, and so on. "While this method can prove to be more expensive, it's what you want to use when you need to motivate yourself with quicker results," Gonzalez says.
Although the snowball method may be easier to implement, it may also take longer to become debt-free, Gonzalez says.