Credit card debt is continuing to fall throughout most of 2020, according to new data from Experian. Despite a recent trend upwards, overall consumer credit card debt is at its lowest point since 2017. Here’s what you need to know:
Experian Data Shows Drops In Credit Card Debt for 2020
The coronavirus pandemic has seen credit card debt shrink at one of the fastest rates on record. According to new data from credit bureau Experian, nearly $75 billion has been wiped off the total outstanding credit card debt since the start of 2020.
At the start of the year, consumer credit card debt totaled $829 billion. That figure arrived after eight years of continuous growth. Now, however, the total outstanding debt is about $756 billion. That is the lowest level of consumer card debt in three years.
The Experian report is showing a general decline in consumer credit card use. Both credit utilization and late payments – two critical indicators in credit card use – declined over the same period.
Coronavirus Hits Consumer Confidence Hard
This unexpected drop in consumer credit card debt comes amidst the backdrop of a devastating global pandemic. Despite losses of millions of jobs and dwindling economic security, Americans appear to be hesitant to take on more debt.
In September, we reported that financial experts predict 2020 will be the first time in over a decade that Americans will exit the year with less credit card debt than they started with. Indeed, reports from the Federal Reserve saw revolving credit debt levels fall 10.5% in June, just months after reaching an all-time high in February.
Consumer Confidence Returning?
While the coronavirus pandemic has impacted credit card usage significantly, consumer confidence appears to be growing. As reported in November, new Federal Reserve data indicated that consumer credit card debt resumed rising. The Federal Reserve’s G.19 consumer credit report showed an increase of 2.14% in overall consumer credit card debt during September – up after a sharp decline of 11.7% in August.
The holiday season will likely continue this upward trend in consumer credit card debt. Still, 2020 appears to be a year of overall debt reductions from record highs in previous years.
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