Although debt is an ever-present reality for many Americans, credit card debt fell sharply at the onset of the pandemic. In July, CivicScience reporting showed 43% of U.S. adults had paid off all their credit card debt and 20% had been making higher monthly payments on their balances. Nearly nine months later, even more of the population is both paying off credit card debt (46%) and making higher monthly payments (23%).
The people whose finances have been negatively impacted by the pandemic are the most likely to have paid off their debt and recently taken on more credit card debt. While it’s a clear example of how varied financial situations are among Americans right now, it shows a concerted focus on getting out of debt.
Consumers without other forms of debt show a greater chance of having recently paid off their credit card debt than people who do have other forms of debt.
People with home equity debt are not only less likely to have paid off their credit card debt, but they are also most likely to have taken on more credit card debt in recent months.
Forms of Payment and Economic Outlook
Debit cards are still the primary way Americans 18 and older are conducting transactions, meaning they are making sure to spend money they already have. However, nearly one-third of adults use credit cards as their primary payment method.
At the same time, people who primarily use debit cards have the most amount of credit card debt compared to people using other payment forms. Only 30% of people who primarily use credit cards actually have credit card debt.
Families or individuals with higher overall household incomes are less likely to have credit card debt either because they have the cash flow to pay their balances, or they more easily qualified for a card in the first place.
Expected household income also affects someone’s experience with programs that allow you to buy a product immediately and go on an payment plan.
Lower-income earners show the greatest intent to try payment programs, but experience with them is nearly even across all income brackets.
Twenty-three percent of people with credit card debt are fans of these buy-now, pay-later services (as opposed to 13% of people without credit card debt) but they also report dissatisfaction at a fairly high rate (9%). Intent to try is minimal among both groups.
Consumers report some of the highest concern about the economy and jobs CivicScience has tracked in years (since 2014). As credit card debt trends downward, interest in payment programs stagnates, and consumer confidence in the economy is low, it appears Americans are holding tight to their budgets and waiting to see what happens.
But not everything indicates closed wallets. Ongoing tracking reveals fewer consumers reporting spending less as a result of the pandemic. While people are hesitant toward taking on debt or use lending programs as much as before, they are at least willing to spend some of the money they do have.