New data from the Federal Reserve shows that credit card debt rose in September for the first time in months. The jump in overall credit card debt is a potential sign that the economy is recovering – and consumer confidence is growing – after months of shrinking due to COVID-19. Here are all the details:
Consumer Credit Card Debt Up in September
The Federal Reserve’s G.19 consumer credit report shows an increase of 2.14% in overall consumer credit card debt during September. Consumer credit cards saw a significant spike in debt, with balances up 4.8% in September to $988.6 billion. That 4.8% jump in credit card debt follows a sharp decline of 11.7% in August’s credit card debt.
The rising debt levels are signs that the U.S. economy is recovering from the depths of the COVID-19 pandemic. Credit card debt has been shrinking since March when the coronavirus first began to hit the U.S.
Growing Consumer Confidence
The rise in consumer credit card debt coincides with growing consumer confidence. According to a report by the New York Federal Reserve, Americans anticipate a 2.3% growth in income – up from 2.2% in August. This growing consumer confidence is leading to an increase in spending and debt.
Welcome Relief for Small Businesses
Businesses will undoubtedly welcome the news of rising consumer confidence. Many small businesses have been hit hard by the coronavirus pandemic, with thousands of merchants forced to close their doors and many more struggling to stay afloat. The combination of increasing consumer confidence and the holiday shopping season may help buoy these small companies and ensure their short-term survival.
American Express and other credit card issuers have been encouraging customers to “shop small” by offering statement credits and additional bonuses for cardholders who support local businesses. While these programs’ impact is mostly unknown so far, they undoubtedly played a role in encouraging consumers to get to spending.
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