Americans Paid off $83 Billion in Credit Card Debt in 2020
Many consumers are also borrowing more as interest rates remain low, although they are rising. Budgeting has been part of the silver lining in the pandemic. The massive wave of uncertainty for millions financially was a wake-up call and data is showing that it had a positive effect.
According to a Credit Card Debt Study by personal-finance website WalletHub, Americans paid off almost $83 billion in credit card debt in 2020. This is only “the second time in the past 35 years we’ve even ended the year owing less credit card debt than we started with,” said Jill Gonzalez, an analyst at WalletHub. The first time was in 2009, amid the peak of the Great Recession.
WalletHub also found that the average household credit card debt balance fell to $8,089. Credit cards are very expensive in terms of borrowing, averaging 15.99 percent. Economic indicators have signaled a massive surge in consumer spending once the economy reopens which could drive debt numbers back up.
“A short-term burst of spending is inevitable,” Gonzalez said. “The question is which way the pendulum swings in 2022 and beyond,” she added. “My hope is that consumers will internalize lessons learned during the pandemic and showcase a newfound frugality.”