New Jersey residents now carry the highest average credit card debt in the United States, with balances reaching an average of $8,909 by the end of 2023, according to LendingTree. As Americans grapple with rising living costs and stubborn inflation, many households in the Garden State are increasingly reliant on credit cards to manage daily expenses, pushing debt levels to new heights.
The state’s distinction as the leader in credit card debt is part of a broader national trend. After a brief dip in late 2023, overall U.S. credit card debt has climbed back to $1.14 trillion, with New Jersey, Connecticut, and Maryland at the forefront. Experts say inflation and escalating prices for goods and services are significant drivers, forcing many to turn to credit as a financial cushion.
While credit card debt is a critical issue, it’s not the only form of debt weighing down New Jersey residents. From student loans and home mortgages to medical bills and personal loans, debt in various forms is piling up across the state. Recent data from Experian indicates that consumer debt rose in 49 states, with New Jersey leading the way. Wyoming was the only state to record a minor decrease, seeing a 0.3% dip.
Debt levels also vary across generations. Gen Z holds the least average debt at $29,820, whereas Gen X leads with an average of $157,556. Millennials rank closely behind with an average debt load of $125,047. Older Americans, including baby boomers and the Silent Generation, are taking on less new debt and have slightly reduced their balances compared to the previous year. But every generation has seen an increase in average credit card debt. Millennials, in particular, experienced a 15% rise, while the Silent Generation had the lowest increase, with balances growing by 2.9%.
To combat rising credit card balances, financial experts recommend strategies like the “debt snowball” method, which focuses on paying off debts from the smallest balance to the largest. This approach helps borrowers gain motivation from small victories, encouraging them to continue tackling larger debts. The debt snowball method advises consumers to make minimum payments on all debts except the smallest, to which they devote any extra funds. Once that debt is eliminated, they move to the next smallest, continuing until all debts are paid.
However, experts caution that effective debt management requires addressing the root causes of spending. In many cases, debt is tied to more than just a spending issue; it often stems from underlying stressors, such as dissatisfaction with work or personal relationships, that lead people to overspend. Recognizing and dealing with these underlying issues can help people avoid falling back into debt once balances are paid down.