Credit Card Debt Continues Its Pandemic Plunge

But consumers are expected to increase their spending in 2021

Credit card debt has continued to drop in the U.S., down to $978.8 billion in November, the Federal Reserve reports. The latest numbers are part of a steady decline since the beginning of the coronavirus pandemic in March. Credit card debt had hit a record high in February 2020, reaching $1.0943 trillion.

Key Takeaways

  • Credit card debt in the U.S. hit a record high of $1.0943 trillion in February 2020, but it has steadily fallen during the coronavirus pandemic.
  • November’s $978.8 billion figure is down 10.6% from February.
  • The decline is likely due to increased unemployment and reduced spending related to the pandemic, as well as to moves by credit card issuers, such as lower credit limits.

Credit Card Balances Come Down From Record Highs

The coronavirus pandemic has wreaked havoc on the U.S. economy. Tens of millions of workers have filed for unemployment benefits, and food insecurity has reached crisis levels throughout the country. 

Meanwhile, due to their increased risk of exposure to bad debt, credit card companies have made it more difficult to qualify for a credit card, slashed credit limits, and even closed some customer accounts.

All of these factors have contributed to a decline in credit card spending throughout 2020.

Credit Card Debt in 2020
Month Credit Card Debt
January $1.091 trillion
February $1.0943 trillion
March $1.0661 trillion
April $1.0194 trillion
May $994.7 billion
June $992.4 billion
July $994.3 billion
August $984.6 billion
September $988.6 billion
October $979.5 billion
November $978.8 billion
Source: Board of Governors of the Federal Reserve System, Consumer Credit-G.19 reports for March, June, August, and November 2020

The decline in 2020 has also represented a general cooling off after a long period of increases since the beginning of the decade, which reached $1 trillion for the first time ever in 2017.

Credit Card Debt in the 2010s
Year Credit Card Debt
2010 $839.5 billion
2011 $841.2 billion
2012 $845.9 billion
2013 $858.2 billion
2014 $890 billion
2015 $898.7 billion
2016 $960.3 billion
2017 $1.0181 trillion
2018 $1.0546 trillion
2019 $1.0942 trillion
Source: Board of Governors of the Federal Reserve System, Consumer Credit-G.19 reports for October 2015 and November 2020

The Fed Expects Increased Consumer Spending in 2021

We may not see a full economic recovery in 2021. Vaccine distribution is taking longer than expected, and consumers are still trying to recover financially from the fallout of the pandemic. 

But the New York Fed’s Survey of Consumer Expectations in November shows that households expect to spend 3.7% more in the year ahead—the highest level the central bank has recorded in four years.

That said, the survey also shows that workers don’t expect to see growth in their earnings, which could result in more reliance on financial tools like credit cards to meet their spending needs. Investopedia has tips for how to get out of credit card debt for those who find themselves struggling with this common issue.

Article Sources
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  1. Board of Governors of the Federal Reserve System. "November 2020 Consumer Credit Outstanding."

  2. Board of Governors of the Federal Reserve System. "March 2020 Consumer Credit Outstanding."

  3. Federal Reserve Bank of New York, "Consumers’ Spending Expectations Rise Despite Flat Income and Earning Expectations."

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