Southern U.S states are facing increasing credit card debts as coronavirus cases continue to surge across the United States with concomitant business restrictions and loss of jobs.
A new report published on Monday by CreditCards.com reveals that Louisiana residents carry the biggest debt burden, followed by Mississippi, Oklahoma, Alabama and Arkansas. In comparison, Utah has the lowest debt burden, followed by Minnesota, Wisconsin and Washington, D.C.
The report shows that an average Louisiana household carries at least $7,940 in credit card debt and earns a median income of $51,073. The report reveals only the credit card debts. There are other debts.
If a resident utilizes 15% of his monthly earnings to pay off his credit card debt, it would take the cardholder 15 months to pay off the debt, while paying $1,013 in interest, analysts say.
Regardless of where anyone lives though, analysts project that consumers will have a tougher time getting out of debt this year compared to the past years.
Balance transfers and personal loans that are sometimes used to pay off debts, have become much harder to obtain this year, according to CreditCards.com industry, Ted Rossman.
“Right now, getting out of credit card debt is mostly on you. It’s so important to pay a lot more than the minimum if possible,” he said.
Covid-19 outbreak triggered one of the worst unemployment rates in the U.S, leaving millions with no source of income to pay off debts, and there seems to be no end within months.
“The latest data points to the fragility of the recovery as the Covid crisis worsens,” said Gregory Daco, chief U.S. economist at Oxford Economics. “If this trend continues, it’s an indication that the labor market recovery has gone into reverse.”
“If people are staying home, that means they are not shopping or going out, and that means less employment,” said Torsten Slok, chief economist at Apollo Global Management.
A similar report published last month by Experian shows that Baby boomers have become the generation with the fastest growing debt load. Read more