MIAMI—Consumers’ credit limits decreased in 42 of the 50 states year-over-year as of Q2 2024, with the decrease ranging anywhere from around 0.3% to over 15%, a new study shows.
The report from WalletHub suggests inflation is playing a role in the decline, as consumers charge more on their credit cards to manage monthly expenses.
Montana, Washington and Minnesota, respectively, lead the way with the largest declines. South Dakota and Vermont had the smallest decreases.
Montana
Residents of Montana had the largest year-over-year decrease in their credit limits. The average person’s credit limit over the 12-month period ending in June 2024 was around 15% lower when compared to the previous 12-month stretch, WalletHub said.
In addition to a big overall decrease over the past year, Montanans also had the 15th-largest decrease in the average credit limit on credit cards opened specifically in Q2 2024, compared to in Q2 2023. The average credit limit was over 11% lower.
Montana residents’ credit limits are also below-average in general. The average credit limit on cards opened during Q2 2024 is just $4,794, the 20th-lowest in the U.S. The average between June 2023 and June 2024 was $6,739, the 24th-lowest.
“Montana’s large average credit limit decrease may be due in part to the fact that it is in the bottom 15 states when it comes to income. Interestingly, Montana doesn’t have very high rates of credit card delinquency, so that doesn’t seem to be the main factor,” WalletHub said.
Washington
Washington ranks second among the states where people got the most credit limit decreases as of Q2 2024. Even though the average year-over-year credit limit decrease in Washington wasn’t as high of a percentage as in other states (the 19th-highest), residents had the highest credit limits to begin with.
“In other words, people still lost more borrowing power even with a smaller percentage decrease,” WalletHub said.
“Washington ranks among the top 15 states where people are increasing their credit card debt the most, and sustaining a high credit card balance is one reason why a bank might reduce a user’s credit limit. Washington residents also have had big recent increases in credit card delinquency, another important factor in decreasing credit limits,” WalletHub said.
Minnesota
Minnesotans have faced the third-largest credit limit reductions over the past year, when considering both the percentage decreases and the actual dollar amount changes they resulted in. The average resident’s credit limit over the 12-month period ending in June 2024 was over 9% lower than during the previous 12-month period. In addition, the average credit limit on new accounts opened during Q2 2024 was nearly 14% lower compared to those opened during Q2 2023.
“Minnesota residents are also increasing their credit card debt at an above-average rate compared to people in other states, but Minnesota doesn’t have a particularly high rate of credit card delinquency. Minnesota residents also have high incomes, so it’s likely we may see credit limits rise again in the near future,” WalletHub said.