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Report: Kentucky credit card debt among lowest nationally

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(The Center Square) – While Americans have been busy racking up credit card debt, a new study indicates Kentuckians aren’t as willing to pay by plastic.

Kentucky has the fourth-lowest median credit card debt, according to a study released by WalletHub. The report, which used data from TransUnion, found the median debt for Bluegrass State residents is $2,239.

The study estimated that paying off that amount would take 11 months and 13 days. That was the third-fastest payoff time of any state, and paying down the debt would cost $226 in finance charges.

According to the report, Kentucky was one of just seven states where residents could pay off that median debt in less than a year.

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.

However, John Pelletier, the director of the Center for Financial Literacy at Champlain College in Vermont, noted many people use credit cards to buy things they don’t need. He also pointed to a 2018 study that indicated affluence is often tied to delayed gratification.

“When you have a lot, it may be easier to wait than when you have very little,” he said. “This tells me that many who get into credit card debt trouble are more likely to be those who can least afford to. They are the ones who should resist trying to keep up with the Joneses or making impulse purchases.”

Of Kentucky’s neighbors, only West Virginia residents have a lower median credit card debt. Its $2,131 total was the second-lowest nationally. At $2,322, Indiana was sixth-best, and Ohio came in 10th at $2,375.

Iowans have the lowest median debt at $2,077, while the $3,517 Alaskans owe is the highest.

Paul Obermann, an assistant professor of finance at Idaho State University, said that setting a budget is key for all households. That spending plan should include a way for money to be left over at the end of each month. That money then should go into an interest-bearing account and only be accessed if an emergency arises.

“The budget may also include a category for ‘emergency savings’ so that there is always some money on hand to cover emergencies without having to borrow funds,” he said. “Unexpected situations (despite their name) should be expected when making a budget.”

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