(The Center Square) – Hoosiers appear to be among the most frugal Americans, according to a report looking at credit card spending.
Indiana has the sixth-lowest median credit card debt, according to a study released Tuesday morning by WalletHub. The report, which used data from TransUnion, found the median debt for Hoosiers is $2,322.
The study estimated that paying off that amount would take 12 months and six days. Indiana had the eighth-quickest payoff time of any state, and paying down the debt would cost $251 in finance charges.
Thanks to historic inflation, U.S. consumers added more than $179 billion in credit card debt last year. Thanks to that spending, some of which was on essential products and services whose prices skyrocketed.
Paul Obermann, an assistant professor of finance at Idaho State University, said credit card debt is usually accrued because people face unexpected expenses or have poor budgeting skills.
“Using a credit card is one of the easiest ways to borrow money since other loans are often not as readily available,” he said. “However, credit card debt is one of the worst ways to borrow since credit cards have some of the highest interest rates.”
The study found two of Indiana’s neighbors are better positioned to quickly eliminate credit card debt. At $2,230, Kentucky has the fourth-smallest median debt and the third-fasted payoff time at 11 months and 13 days.
Ohioans have the sixth-fastest payoff time at 11 months and 27 days to eliminate $2,375, the 10th-smallest median credit card debt in the U.S.
Michigan’s debt of $2,438 was the 12th-smallest, and Illinois’ median debt of $2,618 was 27th. However, it would take an Illinois resident 12 months and 23 days to pay it off, compared to 13 months and three days for a Michigan resident.
Iowans have the lowest median debt at $2,077, while the $3,517 Alaskans owe is the highest.
Karen Holden, an emeritus professor of public affairs and consumer science at the University of Wisconsin-Madison, said the federal government has taken steps to inform consumers about debt, such as requiring payoff times on credit card statements.
Still, Washington could do more to protect Americans.
“Unfortunately, our government has not been particularly encouraging of low debt,” she said. “For example, mortgage debt is encouraged by income tax preferences for homeowners versus renters. Our health care system causes individuals with high-cost health conditions to go into debt.”
She added that federal bankruptcy laws could help consumers by considering costs from “unpredictable” events, such as disasters or medical emergencies.
