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Second City Advisors Discusses The Worst States to Have Credit Card Debt In

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According to the findings of the USA Today, which were based on research conducted by the Federal Reserve, Americans owe a whopping $1.04 trillion in credit card debt as of March. While this is certainly no more than a glimpse of the overall national debt, it still places the U.S. on top of the list of countries ranked by credit deficits.

It is important to note that the more concerning part about the said figure is the fact that it has been continuously rising for years. So, individuals residing here did not suddenly wake up one morning to thousands of dollars in credit spending. They built those liabilities over an extended period of time.

Does location play a role?

When it comes to the 50 states, it is easy to separate those where residents have more credit card debt than elsewhere. Regardless, it would not be fair to use this data as evidence for claims that the location plays a role in the matter. After all, people who succumb to a lot of debt will have to take a serious look into their financial budgeting and money management skills long before they blame their liquidity problems on the state. So, in reality, the location does not play an important role in credit card debt.

The previous claim is definitely true when it gets re-worded a little bit, however. Instead of saying that the location plays a role on someone's credit card debt, it is much more accurate to say that credit card debt plays a major role on someone's locations. What is meant by that is that there is a direct impact that credit card debt will have on an individual's overall quality of life. Since owing money undermines the spending history, bad borrowers' credit scores will drop. Once that happens, they will find it much harder, maybe even impossible, to gain financing and qualify for larger purchases.

As with everything else in the U.S., however, certain states are more lenient than others. There will always be those regions where a bad credit history perpetuated by credit card debt has practically no impact on the quality of life. By default, unfortunately, this also means that there are many states where owing money on credit cards and having a low credit score will make someone's life incomparably more difficult.

The Worst States to Have Credit Card Debt

Before diving into the actual list of states that people with credit card debt should avoid, what exactly are the most important reasons to consider here? According to a debt management company, Second City Advisors, the first one is the necessity for financing tied to the costs of living. Someone who resides in a state where the real estate, college, and daily prices of common items are high, per se, could end up needing a loan or some form of third-party financing to pay for things. Great examples would be trying to purchase a home, new vehicle, pay for dependents' college education, and similar. When the financial capital required to accomplish all of the aforementioned is sky-high though, there may be an unavoidable need to get yet another loan. Courtesy of the credit card debt, however, securing that loan could become a nightmare characterized by a plethora of denials or interest rates so aggressive and high that they make local shark loans seem pleasant.

Another reason is the average salary per capita and how it ties to the person's ability to repay their credit card debt. Since there are obvious discrepancies between states, it is fair to expect that some regions will be much more favorable. People living in Connecticut, for example, earn an average salary of almost $67,000 per year. Expectedly, moving there would seem like a smart idea for an individual who wants to earn enough money to finally pay off their credit debt. At the same time, the average annual earnings for Alabama are under $39,000. Such a wide gap makes it easy to conclude how Connecticut-like states are much more preferable for people with high credit card debt.

Tennessee

Tennessee is a great example of a terrible state for people who owe a lot on their credit cards. The first reason why is that the average earnings are under the national average at approximately $42,000. Tennessee is also notorious for constant price increases that make life a lot harder whenever there are hefty purchases. Finally, this state is one of the leaders in interest rates which makes any possibility of a favorable debt consolidation process almost nonexistent.

South Carolina

South Carolina home and tuition prices have placed this state on the41st and 43rd spot in the nation, respectively. Why? Because they exceed the national average and showcase a large discrepancy between asking prices and residents' earnings. After all, the average salary in South Carolina barely goes over $38,000. People who already owe money will definitely not find it easy to prosper here once an enormous chunk of that salary goes towards paying the most basic bills.

Georgia

Although Georgia's average earnings and rising prices do not help its case, the true reason why people with credit card debt should avoid it is something else. Namely, Georgia is ranked as 48th in the U.S. for money owed on credit cards. This has slowly caused it to become a perfect home for illegal debt collectors and companies that utilize intimidation tactics. Therefore, a peaceful life and credit card debt will be an oxymoron which represents something unachievable.

California

California is the number one state when it comes to the presence of debt collection entities. It is also the second-highest state when ranked by its prices and cost of living, as per the Second City Advisors. Not to mention the skyrocketing home values that practically force people into enormous mortgages. And while the average earnings are decent of $52,000 are decent, they are nowhere near enough to compensate for the previous shortcomings of the state. Thus, the odds of someone paying off their credit card debt in California while avoiding new loans are so low that simply staying far away from the Golden State may be the best course of action.

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