U.S. Credit Card Balances Reach Lowest Total Since 2017

If the credit card balances you carry have decreased in recent months, you’re not alone! According to data from TransUnion, credit card balances fell to a total of $723 billion during the third quarter of the year. That’s not only down $15 billion from the prior quarter but is also down $84 billion from one year ago. In fact, the sum is the lowest total since Q2 2017 when balances amounted to $714 billion. These Q3 2020 figures also mean that the average consumer-level credit card balance now sits at $5,075 — down $593 year over year.

Although the timing of these balance pay downs may seem counter-intuitive given the economic turmoil that’s existed for much of 2020, it’s likely the result of Americans simply spending less during lockdowns. As TransUnion SVP and credit card business leader Paul Siegfried explains, “Credit card balances have been severely impacted by the COVID-19 pandemic as consumers have slowed purchases, especially on travel and entertainment. With fewer people using their credit cards to buy airline tickets or spend money on vacations, it’s understandable to see such a precipitous drop in balances.”

Moreover, VP of research and consulting Matt Komos adds, “At the onset of the pandemic, financial hardship programs and the first round of government assistance initially boosted consumer liquidity. However, external factors such as rising unemployment and uncertainty regarding additional stimulus legislation may be impacting spending. Consequently, consumers have tightened their wallets to account for a decrease in disposable income.”

It should also be noted that the existing trend of paydowns could turn around as the holiday season approaches, with a traditional increase in spending likely. As Siegfriend notes, “There is also a belief that with the immense slowdown in balance growth during the last few quarters, we may see increased credit usage this fourth quarter as some consumers may be positioned to make more purchases this holiday season.” Additionally, Komos concludes, “This holiday season will be of special importance to determine if consumers may start turning the corner on spending, or if we will see continued tightening of credit use.”

As we’ve previously seen with news of increased savings rates and debt decreases, there has been a financial silver lining to the current situation. Of course, it’s important to point out that this isn’t the case for everyone as many Americans continue to struggle with unemployment and other money issues (not to mention health concerns) due to the pandemic. Therefore, while these latest figures may be good news overall, it’s clear that additional stimulus measures will be necessary — especially as COVID cases rise across the country.


Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded DyerNews.com in 2015 to focus on personal finance and the emerging FinTech markets.

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