Americans cut down their credit card debt by 11% last year, compared to 2010, according to a new report by Credit Karma. 24/7 Wall St. looked at the average credit card debt owed by the residents of each state to determine the five states with the most and the least debt as of December 2011.

Credit card debt is a measure of the economy, and some analysts are suggesting that the decrease in the debt is a positive sign. But not all agree. Ken Lin, CEO of Credit Karma, told CNNMoney that the drop in debt is the result of weak consumer confidence, resulting in slower spending, tighter lending on the part of banks and lower credit limits.

One of the driving factors for states whose residents owe the most in credit card debt is that they are wealthy states. Nine out of the 10 states with the most in credit card debt have among the highest median household incomes. Alternatively, six of the 10 states with the smallest amounts of credit card debt have among the lowest median incomes.

Other than high median income, many high-debt states also have high costs of living relative to other states. Seven of the 10 with the highest rates of debt are within the 15 states with the highest costs of living. When people must pay more for consumer goods, they often end up with larger amounts of debt. The opposite case is also true. States whose residents pay less for goods have less debt. Four of the 10 states with the lowest amounts of debt are within the 15 states with the lowest costs of living in the country.

Corresponding with wealth, many of the states with high levels of debt have above-average credit scores. In fact, six of the 10 states with the most debt are among the 15 states with the highest average credit scores. Six of the 10 with the least debt are among the 15 states with the lowest credit scores.

States with the Least Credit Card Debt

5. Louisiana
> Credit card debt: $5,856
> Median household income: $42,505 (10th lowest)
> Average credit score: 635 (3rd lowest)
> Cost of living: 20th lowest

Louisiana is a relatively poor state, with the 10th-lowest median household income in the country. The low income keeps spending levels low too. The average credit card debt among Louisiana residents is the fifth-lowest in the country. This does not prevent state residents from having financial troubles — their average credit score of 635 is the third worst in the country. Two Louisiana cities — Shreveport and Monroe — were recently included in a list of the largest U.S. cities with the lowest credit scores in the country.

4. Utah
> Credit card debt: $5,816
> Median household income: $54,744 (13th highest)
> Average credit score: 673 (5th highest)
> Cost of living: 5th lowest

Utah is relatively wealthy, with a median household income of nearly $55,000. Despite this, the cost of living in the state is the fifth-lowest in the country. With high incomes and a low cost of living, Utahns maintain conservative personal debt, illustrated by their fifth-highest average credit score.

3. Alabama
> Credit card debt: $5,770
> Median household income: $40,474 (5th lowest)
> Average credit score: 637 (5th lowest)
> Cost of living: 12th lowest

Alabama is another poor southern state. Each household makes approximately $40,500 — the fifth-lowest median income in the country. A relatively low cost of living may have contributed to Alabama residents having one of the lowest levels of credit card debt in the country, but it did not help their credit scores. Alabama has one of the lowest average credit score in the country. Alabama was named by U.S. News as one of the most frugal states in the country.

2. Mississippi
> Credit card debt: $5,276
> Median household income: $36,851 (the lowest)
> Average credit score: 652 (18th highest)
> Cost of living: 10th lowest

Mississippi residents have the second-lowest amount of credit card debt in the country. They also have the lowest median household income, at $36,851. On top of this, the cost of living in the state is the 10th lowest. Unlike Alabama, however, residents manage to maintain relatively high credit scores — the state average is the nation’s 18th highest. Mississippi also was named as one of the most frugal states by U.S. News.

1. Wisconsin
> Credit card debt: $5,062
> Median household income: $49,001 (22nd highest)
> Average credit score: 662 (14th highest)
> Cost of living: 25th lowest

Wisconsin has the lowest average credit card debt in the country. This appears to be the result of frugality. The state has a higher median household income than many other states with low average credit card debts. The low level of credit card debt in the state cannot be simply explained by a low cost of living as it is not especially low in the state. The fiscal responsibility of Wisconsinites is fairly high, demonstrated by their average credit score, which is the country’s 14th highest.
States with the Highest Credit Card Debt

5. Colorado
> Credit card debt: $7,533
> Median household income: $54,046 (15th highest)
> Average credit score: 669 (11th highest)
> Cost of living: 19th highest

Colorado is not quite as wealthy as the other states with the highest average credit card debt. But it still has the 15th-highest median household income in the country. The cost of living in the state is comparable to the state’s median income. Despite the high level of debt, residents are generally living within their means, as exemplified by the state’s high average credit score.

4. New Jersey
> Credit card debt: $7,608
> Median household income: $67,681 (2nd highest)
> Average credit score: 679 (the highest)
> Cost of living: 6th highest

New Jersey has the sixth-highest cost of living in the country. Residents, though, have the money to spend and accumulate debt. With a median household income that is the second-highest in the country, it is not surprising that residents have racked up such a high average credit card debt. Despite the high debt levels, however, personal finances are managed well — the average credit score for New Jersey is the highest among all states.

3. Connecticut
> Credit card debt: $7,730
> Median household income: $64,032 (4th highest)
> Average credit score: 672 (9th highest)
> Cost of living: 4th highest

Connecticut is often recognized as one of the country’s wealthiest states. This is a well-earned reputation. The state has the fourth-highest median household income. The cost of living is also higher than that in all but three states. Residents, therefore, spend more than those in most other states. Average credit card debt is the third highest in the country, but not surprising, their credit scores are also high.

2. New Hampshire
> Credit card debt: $7,748
> Median household income: $61,042 (7th highest)
> Average credit score: 659 (19th highest)
> Cost of living: 10th highest

New Hampshire is another New England state with a high median household income and a high cost of living. Its median income is the seventh-highest in the country and cost of living is the 10th-highest. Residents of the “Live Free or Die” state use this affluence to manage the high costs, racking up the second highest rate of credit card debt.

1. Alaska
> Credit card debt: $7,937
> Median household income: $64,576 (3rd highest)
> Average credit score: 659 (21st highest)
> Cost of living: 2nd highest

Alaska is the third wealthiest state in the country by median household income. It is also the second most expensive state, due in large part to its distance from the continental U.S. Residents of the state had nearly $8,000 in average credit card debt as of December 2011. The average credit score in the state is not among the highest, but it is not exceptionally low either.

Charles B. Stockdale

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