Following a year of record-high inflation and rising interest rates meant to cool down inflation, Connecticut residents are racking up some of the highest credit card debt in the country, according to two separate analyses.
The loan company Lending Tree found Connecticut has the highest average credit card debt in the country for the first quarter of 2023, topping out at $9,408 per credit card holder, higher than nearby neighbors New York, New Jersey and Rhode Island and 30 percent above the national average.
Connecticut’s average credit card debt was 74 percent higher than Kentucky, which had the lowest average debt in the country at $5,408. Overall, 25 states saw their average credit card debt grow by 10 percent or more.
Wallethub found Connecticut had the fourth highest median credit card debt in the nation at $2,979 behind Alaska, Washington D.C., and Colorado. Wallethub ranked Connecticut 14th for credit card debt based on sustainability, accounting for factors like median income and the amount of time it will take to pay off the debt.
Either way, it appears Connecticut residents are swiping the credit card more and more, and they’re not alone. Credit card debt has been rising nationally each quarter. According to the Federal Reserve’s July 10 release of consumer credit numbers, revolving credit, including credit cards, increased 8.2 percent during the month of May alone following double-digit increases in March and April.
Overall, 2022 saw revolving credit debt increase 15.4 percent, after a 6.9 percent increase in 2021 and an 11.2 percent decrease in 2020 during the COVID-19 pandemic. The total revolving consumer credit debt in the nation now stands at $1.2 trillion.
That credit card debt is becoming more costly amid rising interest rates meant to tamp down inflation. According to CNBC, in June the average credit card interest rate hit a record high of 20.69 percent, but other organizations place it higher – Investopedia placed the median credit card interest rate at 23.99 percent.
Lending Tree found that new credit card offers topped out at an average interest rate of 24.24 percent, the highest since they began tracking monthly rates in 2019.
Credit card delinquency has also been trending upward nationally with delinquencies rising to 2.43 percent in the first quarter of 2023.
Dorris Perryman, adjunct associate professor of accounting at Bristol Community College in Massachusetts, says governments should make financial literacy courses a requirement in schools.
“The government should require all students to take a financial literacy course, just like English or math,” Perryman said. “A financial literacy course can reduce the anxiety of individuals when most the discomfort comes from not having enough money or not knowing how to manage the money they currently possess.”
The Connecticut General Assembly recently passed such a requirement for students to graduate high school starting in 2027. The curriculum will come from the Connecticut State Board of Education to help local school boards develop the courses, which will include “instruction on banking, investing, savings, the handling of personal finance matters, and the impact of using credit cards.”
“Personal financial management is one of the most important instructional tools that we can give young people to achieve economic independence and stability throughout their lives, and requiring it to graduate from high school is simply common sense,” Lamont said in a press release.
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