It seems South Dakota’s residents have an exclusive club – the “Six-Thousand Dollar Club”, and it’s not for the faint of heart. In fact, recent data suggests that the average credit card debt in the state is now a whopping $6,367. Not exactly a milestone to celebrate, is it? The state’s household finances seem to be more of a roulette game than a prudent budget exercise and the stakes are seeming to get higher with each tick of the economic clock.
Don’t be mistaken, the state’s credit card debt is not on a rocket-like trajectory alone. Oh no, the mortgage, car loans, student loans, and other forms of debt are all trying to get in on the action. Some economists see this trend as the perfect recipe for ushering in a slow economy, while others suggest that this won’t be the straw that breaks the state’s economic camel’s back. The silver-lining brigade suggests that we remember delinquency, citing a salient point from the Federal Reserve of New York, “a 3% increase in credit card debt isn’t the worst news.”
Believe it or not, South Dakota’s not the state with the most plastic-borrowed debt. The state is knocking about the mid-30s in credit card debt rankings – an improvement from being ranked 39th by LendingTree in their glamorous list of states throwing money around like Oprah at her annual car giveaway. Alaska’s debt, for instance, dances a little cha-cha with the numbers, moving from $6,787 in 2022 to $6,367 in 2023, while Connecticut boldly takes the crown with a staggering $9,408.
Surprisingly for a state whose average credit card debt has seen a considerable rise, the pace of growth is slower compared to other states. However, the total household debt is another kettle of fish entirely, which swelled by 1.3% to touch the lofty peaks of $17.29 trillion at the end of 2023’s third quarter. Auto loan balances have been on an upward trajectory since 2011 and now stand at $1.6 trillion.
Just when you thought it couldn’t get any worse, the housing costs in South Dakota have also decided to join the party. The median price of a home in the state has shot to $332,000. Though comparatively lower than other states, it still adds on to the growing pile of debt for households.
So, it begs the question – how far does the average dollar stretch in South Dakota? Not as far as you’d like, it seems. The state saw a drop in median household income of about 9.08% from 2021 to 2022, bringing it down from an “adequate” $73,890 to a “you’ve got to be kidding me” $67,180. The pandemic’s stimulus money and sales tax revenue did play their parts in boosting the income, but it seems like the debt still overshadows it all.
And let’s not lose sight of the most telling number: the debt-to-income ratio. If it’s more than one, you’re in the red zone, folks! And South Dakota’s ratio? A fantastic 1.227! Just for a bit of context, consider New York, where the average personal debt is about $9,000 more than the average personal income.
Yet, amidst all these grim figures, the impact of rising credit card debt and inflation is felt most acutely by those at the bottom of the economic ladder. Reports suggest that nearly half of the students in the Sioux Falls School District qualify for free and reduced meals, and organizations like Feeding South Dakota have had to feed 900 more families in October than in September.
So, as the curtain falls on this colorful exposition of the state’s credit card debt saga, one can only hope for a plot twist in the coming years. One where the residents of South Dakota leave the ‘Six-Thousand Dollar Club’ for a more financially stable and economically sound future. But till then, perhaps, it would be a good idea to keep those credit cards tucked away, eh?