The Burden Of Debt

Amidst The Chaos Of 2020, Americans Excelled At Paying Off Credit Card Debt

Clearing a record 82.9 billion of debt

New market research from measures the degree to which states are easing, or increasing, restrictions to commerce. View full report here.

While 2020 was a year to forget in most respects, Americans excelled in terms of paying off credit card debt, getting rid of a record $82.9 billion in debt, according to the personal-finance website WalletHub’s latest Credit Card Debt Study, released today. This is a major accomplishment, considering that consumers have added an average of $54.2 billion in credit card debt per year over the past 10 years.

Please find WalletHub commentary and other key takeaways below, including findings from a nationally representative consumer debt survey, also released today.

Cities with the Biggest Debt Paydown Cities with the Biggest Debt Increase
Oxnard, CABurlington, VT
West Valley City, UTLewiston, ME
Augusta, GAFort Smith, AR
Pearl City, HIPembroke Pines, FL
Shreveport, LANorfolk, VA
Warwick, RILong Beach, CA
Gulfport, MSRutland, VT
Garden Grove, CAGrand Rapids, MI
Nampa, IDJackson, MS
Laredo, TXManchester, NH

Credit Card Debt Study Key Stats

  • Consumers repaid almost $83 billion in credit card debt during 2020 – an all-time record
  • The average household credit card balance was $8,089 at the end of 2020.
  • Credit card debt rose by $36.7 billion during Q4 2020 – the lowest increase in 10 years.
  • Credit card charge-off rates are down 24.3% compared to Q3 2020.
  • The best balance transfer credit cards currently offer 0% APRs for the first 12-20 months with no annual fee and balance transfer fees as low as 3%.

Credit Card Debt Survey Key Findings

  • Few plan a post-pandemic shopping spree. More than 1 in 10 people plan to go on a spending spree when the COVID-19 pandemic is over.
  • COVID is an obstacle to debt. Almost 35% of Americans say that COVID-19 made it harder to get into serious credit card debt.
  • Men feel less debt stress. Women are 37% more likely than men to feel stressed about credit card debt.
  • Most agree, healthcare is debt-worthy. 60% of Americans say that healthcare expenses are worth going into credit card debt.
  • Fighting back against high rates. 66% of people will try to lower the interest rate on their credit card debt in 2021
People trying to get rid of credit card debt need to make an aggressive plan that will enable them to get debt-free as soon as possible...

Q&A with WalletHub Analyst Jill Gonzalez

What do the latest credit card debt statistics tell us about the health of U.S. consumers?

“The latest credit card debt statistics tell us that American consumers are actually getting healthier financially in some respects because of the coronavirus pandemic. We paid off a record $82.9 billion in credit card debt during 2020 – just the second time in the past 35 years we’ve even ended the year owing less credit card debt than we started with. Paying off so much credit card debt indicates that consumers have been making the most of the pandemic, by using the stimulus money and COVID restrictions to make their finances more sustainable.”

How will credit card debt levels look in 2021?

“WalletHub is projecting that consumers will add around $50 billion in credit card debt during 2021. A short-term burst of spending is inevitable as pandemic restrictions are lifted. The question is which way the pendulum swings in 2022 and beyond. My hope is that consumers will internalize lessons learned during the pandemic and showcase a newfound frugality.”

What advice do you have for people trying to get rid of credit card debt?

“People trying to get rid of credit card debt need to make an aggressive plan that will enable them to get debt-free as soon as possible. Figuring out a way to maximize monthly debt payments, which might mean cutting some expenses from your budget, is key. Credit card interest rates tend to be pretty expensive, so time really is money when you’re working to pay off credit card debt. A lot of people think getting rid of credit card debt is all about cutting back on spending, but it’s also important to consider the income side of things. Earning a higher income would give you more money for debt payments without changing your spending habits.”