While plenty of Americans decided to kick off holiday shopping on Black Friday and Cyber Monday, the real spending has just begun. In December, Americans spend 40% more on their credit cards than they would in an average month, according to a report from TransUnion, and more spending can translate to a high credit utilization rate.
That ratio — which shows how much a consumer is using of his or her available credit — has a large impact on credit scores, which play a major role in a person’s ability to secure credit at good interest rates. Based on data from Experian-Oliver Wyman Market Intelligence Reports and Experian’s IntelliView tool, the average U.S. credit utilization rate jumps in the fourth quarter, which includes two of the three peak months for credit card spending. (August is a distant second to December, and November is third.)
At the end of the third quarter of 2013, 20 states had an average credit utilization rate above the nation’s average of 20.4%, down from 21% in Q3 2012 (10% or less is considered ideal). Alaska’s 27.7% drives up that national average, and North Dakota is on the other end of the spectrum at a relatively low 17.7%.
States Pushing Their Credit Limits
While Alaska has a significantly higher credit utilization rate than other states, its residents aren’t alone in using up a lot of their available credit. In the run-up to the holidays, these 10 states had the highest credit utilization rates. Given the trend of the past three years, those rates are bound to go up in the fourth quarter.
10. Tie: Louisiana, South Carolina and Texas — 21.8%
7. Tie: Oklahoma, Nevada and Arkansas — 22.2%
4. Alabama — 22.7%
3. Georgia — 23.0%
2. Mississippi — 23.3%
1. Alaska — 27.7%
Those numbers are mostly consistent with Q3 2012, though Georgia, Nevada, Alabama, Arkansas and Texas experienced slight declines. Louisiana and South Carolina were the only states new to the top 10, despite their unchanged rates of 21.8% from 2012 to 2013. The ranking shift resulted from year-over-year declines in Utah and New Mexico.
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