U.S. Consumer Credit Card Debt Falls Again in Q3 2020 U.S. Consumer Credit Card Debt Falls Again in Q3 2020
Chart of US Credit Card Debt

U.S. Consumer Credit Card Debt Falls Again in Q3 2020

In what may come as a surprise to some but consumer credit card debt once again took a tumble from June to September. According to WalletHub’s latest data, American consumers paid down a total of $707 million during the third quarter of 2020. Although that’s extremely modest in comparison to the $60 billion and $58 billion in credit card debt erased in Q1 and Q2 respectively, it still marks the first time that a third-quarter debt reduction has been recorded in 35 years. What’s more, the site now projects that consumers will see a year over year reduction in credit card debt for the first time since the Great Recession, with the drop expected to total $89 billion.

For comparison, in 2019, Americans tacked on another $21 billion to their credit card debt after also adding $35 billion during Q2 of that year. As a result, the total owed rose by $76.7 billion during the full year. In other words, if projections hold true, consumers will erase that and then some in 2020. The last time there was a negative net change in total credit card debt was 2009 when debts dipped $900 million for the year.

Year over year, total credit card debts fell from $1.024 trillion to $926 billion. In turn, the average credit card debt per household dropped by 10.8% year over year. In Q3 2019, the average sat at $8,798 but fell to $7,849 this past quarter.

As mentioned last quarter, the timing of these paydowns may seem odd given the pandemic and the hardships its brought upon many people across the US. However, it seems the reduction in spending among those who have remained financially stable during the crisis has outpaced additions from those who may be relying on credit to get through. In that way, the debt reduction could be seen as a positive side effect of what’s otherwise been a challenging time. As WalletHub analyst Jill Gonzalez adds, “The more than $119 billion in credit card debt that U.S. consumers have repaid during the first three quarters of 2020 is actually one clear silver lining of the pandemic. Paying off debt is one of the best ways to pandemic-proof your finances, and too many of us were way far too overextended at this time last year, so it’s great that we’ve collectively cut back.” Looking toward the year’s end, Gonzalez also notes, “WalletHub is projecting consumers to add about $30 billion in credit card debt during the fourth quarter of 2020, leaving us with a decrease of about $89 billion in credit card debt for the year. If consumers do end 2020 owing less credit card debt than they started with, it would only be the second time in at least 35 years that’s occurred.”

With reports suggesting that Americans plan to spend less on holiday expenses this year, it’s possible that the projected $89 billion payoff figure may end up being even larger. That said, it seems all but certain that a rise in spending overall will snap the mini-streak we’ve seen. Regardless, these recent debt reductions seem to be a fortunate result of an unfortunate time. With any luck, consumers will carry the lessons they’ve learned throughout this pandemic, allowing them to further pay down debts in the future.

The "Email" field is empty, you must enter some text to proceed.The text you entered in the "Email" field appears to be invalid, please edit it and try again
Get the Latest News Delivered to Your Inbox

FedEx Announces Winners of 11th Annual 2023 Small Business Grant Contest

Nearly three months after the entry period ended, FedEx has announced the winners of its 11th annual Small Business Grant Content. This year's event saw more than $300,000 in funds going to a variety of small businesses across the nation. Last month, the company revealed 100 finalists, with that list now being narrowed down to just 10 winners. This year's grand prize winners included KindVR, The Cupcake Collection, Up In...
H-E-B and Central Market  credit cards

Imprint Launches Credit Cards from H-E-B and Central Market 

The FinTech Imprint is partnering with the popular Texas-based grocery chain H-E-B for a pair of new rewards credit cards. This week saw the launch of the H-E-B Visa Signature Credit Card as well as the Central Market Visa Signature Credit Card. With these two (nearly identical) options, customers will be able to earn rewards on groceries and beyond. First, both versions of the card earn up to 5% back on select...
Summer app

Student Loan Benefit FinTech Summer Raises $6 Million

For years, student debt has been one of the most talked about financial topics. What's more, while the debt itself has become a major part of many Americans' lives, discussion of student loans has become political due to efforts to forgive certain loan repayments. However, while we wait for resolution on that front, a FinTech that brings student debt benefit solutions to employers and consumers has raised a new round...
Choice Privileges Select Card

Choice Hotels, Wells Fargo Debut Choice Privileges Select Card

With spring well underway and the summer travel season now just around the corner, Choice Hotels and Wells Fargo have unveiled their latest co-branded credit card offering. Today, the two companies announced the Choice Privileges Select Mastercard. Carrying an annual fee of $95, this card will serve as the premium option in the hotel brand's new lineup. Looking at the Choice Privileges Select, it offers a mix of rewards categories....
Melissa Urban holding a Ness card

Health and Wellness Rewards Card Ness Partners with Whole30

In recent years, several unique rewards cards have come to market. These include offerings from FinTech startups as well as brands looking to do something special for their loyal fans. On that note, a recently-announced rewards credit card offering is now working with a popular brand to introduce new benefits for customers. This week, the Ness Card (which is issued by The Bank of Missouri) unveiled a new partnership with...