People in this state take the most time to pay off their credit cards


Customers pay at a cashier station in a JCpenney Store at the Newport Mall in Jersey City, New Jersey.

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Going big on those holiday purchases will cost you — especially if you’re in New Mexico.

Residents in the Land of Enchantment take 17 months to pay off an average credit card balance of $8,356, according to new data from CreditCards.com. Consumers in the state are the most heavily burdened with credit card debt, the personal finance site found.

CreditCards.com analyzed household income and debt data from the U.S. Census Bureau and Experian.

The size of your credit card balance isn’t the only factor in determining whether the debt is truly burdensome.

Annual household income also influences how speedily you can pay off what you owe, said Ted Rossman, industry analyst at CreditCards.com.

Indeed, the median household income in New Mexico is $47,169, the study found. CreditCards.com assumed that consumers would carve out 15% of their gross income to service the debt.

“We found that the places with the highest debt burdens were places where the average credit card debt was in the middle of the pack,” Rossman said. “The problem in New Mexico is that the income is so low.”

Income vs. debt

In comparison, Massachusetts residents — ranked the least burdened — have an average credit card balance of $8,197, but the median household income there is $79,835, CreditCards.com found.

It takes Bay State residents nine months to get out of the red, assuming they earmark 15% of their income to crushing the debt.

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Here are the 10 states most burdened by credit card debt, based on debt and income.

Lengthier payoff times also lead to higher interest expenses.

Consider that borrowers in New Mexico are paying $1,339 in interest to squash their debt balances over 17 months, while Massachusetts consumers are paying $734 in interest costs over nine months.

Managing red ink

The average interest rate on a credit card is 17.41%, according to Bankrate.com, so the best course of action is to eliminate your balance as quickly as possible.

Balance transfer cards allow you to move your debt and pay down what you owe at a 0% interest rate for well over a year.

The catch is that the interest rate could skyrocket to as high as 25% after the introductory period, so you must commit to timely repayment — and you must avoid adding to your balance.

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Further, your new balance transfer card could assess a fee of 3% to 5% for moving the debt to the new account.

If you’re making hefty repayments to get rid of the debt, make sure you can fit this within your cash flow. Chances are you’re managing the balance on your plastic, along with your mortgage and your student loan repayment.

A rule of thumb to consider is the “back-end ratio,” meaning that your monthly housing costs and debt payments should not exceed 36% of your gross monthly income.

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