Americans have used the global pandemic to pay off a record amount of debt.
In total, Americans repaid $83 billion in credit card debt during 2020 — a record, according to a "
Credit Card Debt Study" conducted by personal-finance website WalletHub.
Many people have leveraged low interest rates to refinance and lower their monthly bills. Federal relief, such as stimulus checks, expanded unemployment benefits and an extended pause in loan repayments have also enabled Americans to get control of their debt.
The year 2020 was only the second time in the past 35 years that Americans ended a year owing less credit card debt. The first time was in 2009 following the Great Recession.
By the end of last year, the average household credit card balance in the U.S. fell to $8,089, WalletHub’s survey found. Credit cards are one of the most expensive ways to borrow money. Card rates in the U.S. now stand at 15.99%, on average, down slightly from a record high of 17.85% in 2019.
Many experts predict there could be a surge in consumer spending once more people are vaccinated and restrictions are lifted across the U.S., which could undo some of the recent progress made toward paying down debt.
WalletHub is forecasting that consumers will add $50 billion in credit card debt in 2021. The personal finance site used data from TransUnion as well as the Federal Reserve and U.S. Bureau of Labor Statistics in its latest credit card study.
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