Lechuan Baker was delivering pizzas, a second-job he held while home from the oil fields of the Alaskan Bush, when his car was suddenly t-boned while crossing an intersection. The accident hospitalized him for three months, and while recovering and unable to work, he paid his rent and expenses with his credit card.
“Right before that I had a 720 credit score so my bank had given me a $5,000 credit card,” he said. “When I had that accident, I had no choice.”
At a time of high inflation, expensive food, and economic uncertainty surrounding Trump’s threatened tariffs touching the prices of everything from cars to cans, Alaska is perched as one of the most expensive states to live in. Compared to “the lower 48,” prices are higher for everything from heat to medical expenses, and credit agency data shows that Alaskans are forced to take on heavy debt loads, starting cycles that are hard to break.
Since the Covid-19 pandemic, non-housing household debt nationwide has grown almost a trillion dollars. Credit Card debt during the fourth quarter of 2024 was up 4.0% from the level a year ago, reaching an all-time high at $1.21 trillion. The record low of $0.66 trillion was measured in the first quarter of 2014. In 2024, the average card balance in Alaska was $8,077, followed not-so- closely by Washington D.C. at $7,861, according to third quarter data from Experian.
Many of Alaska’s remote communities can only be reached by air or water, while others only during certain seasons, according to Transportation & Logistics International, a logistics trade publication. The obstacles in delivery factor into how businesses spend their money in the state.
Tracey Parrish runs her company, Alaska Pacific Insurance, from Anchorage.
“We have a Starbucks on every corner,” said Parrish. But her husband Averian “works on the pipeline. He really can see Russia from the backyard up there.”
Oil companies running in the Bush find it more economical to set-up camp-like worksites – with gyms, movies, cooking, cleaning, and sleeping accommodations – rather than supplement worker incomes to buy from local businesses, which are non-existent.
But many of the sub-contractors providing those services live in the Bush, and regular expenses can be exorbitant.
“They’re the ones paying $12 for a candy bar out there,” Parrish said.
Difficulty in reaching and supplying the Bush via little or no roads is just part of the explanation for Alaska’s high costs. Lack of competition is another.
Parrish loved vacationing in the town of Girdwood, near Anchorage, because of its majestic beauty, but was constantly disappointed by its only hotel.
“It’s not fancy at all, but you pay fancy prices,” she said. “There’s no one else out there.” She paid $500 a night.
Credit card balances are higher in Alaska not only because costs are higher, but also because Alaska’s residents are mostly millennials, who use credit cards more often than any other generation, according to Forbes Advisor.
Younger Alaskans are “in a stage of their lives where they have fewer assets and more spending needs,” said Matthew Berman, Professor of Economics at the University of Alaska Anchorage.
Higher rates make it more financially dangerous for consumers to push their costs into the future. When card users lack the income to keep up with payments, they risk being unable to keep up with the avalanche of debt today’s APRs are capable of accumulating. Since 2022, APRs have skyrocketed from around 14.56% to late 2024’s record highs of 21.76%, making this one of the riskiest times to use a credit card.
But as Lechuan Baker, who now works as a financial advisor, sees it, those that grew up in the 80s and 90s have been educated to leverage cards as a financial tool. This financial understanding translates to a more responsible use of cards.
“I see now that people are being more conscious of their finances,” Baker said. His income has allowed him to keep on top of payments.
“I was able to pay down that debt,” Baker said, speaking about his car accident, by making minimum payments until it was eventually paid off.
If you spend $3,500 in cash, “it’s gone once you do that transaction. But with a $3,500 credit card transaction, now you have an opportunity to forecast the rest of the month,” he said.
