U.S. consumers were on track for a record year for debt repayment before the coronavirus pandemic, according to today’s 2020 Credit Card Debt Study from the personal-finance website WalletHub. The study found that consumers paid off a record $60 billion of their roughly $1 trillion in credit card debt during the first quarter of 2020.
With unemployment now at record highs, however, WalletHub projects that U.S. consumers will rack up more than $140 billion throughout the rest of 2020, ending the year with a net increase of $80 billion in credit card debt.
The debt picture is worrisome nationwide, but some areas have bigger payment problems than others. WalletHub compared more than 2,500 cities based on how much residents owe to credit card companies – specifically, how those balances changed in Q1.
| Cities with the Biggest Debt Paydown | Cities with the Smallest Debt Paydown |
| Ewa Beach, HI | Mason City, IA |
| Darien, CT | Camden, NJ |
| Southlake, TX | Paradise, CA |
| Westport, CT | Clarkston, GA |
| Beverly Hills, CA | Sun City West, AZ |
| Colleyville, TX | Inkster, MI |
| Collegeville, PA | Barberton, OH |
| Scarsdale, NY | Sun City Center, FL |
| Greenwich, CT | Wisconsin Rapids, WI |
| Waipahu, HI | Laguna Woods, CA |
Q&A with WalletHub
How did consumer credit card debt fall when so many people are out of work?
“The latest credit card figures are for the first quarter of 2020, before the coronavirus pandemic began to really wreak havoc in the U.S.,” said Jill Gonzalez, WalletHub analyst. “It’s common for consumers to pay down credit card debt during the first few months of the year, as this is when many people receive annual salary bonuses and tax refunds. This year’s first-quarter paydown was just a lot bigger than normal – at least 50% higher than anything we’ve seen in the past 20 years, which is what makes it so tantalizing in the context of what we all know came after that.”
How has the Q1 2020 credit card debt paydown affected people’s ability to withstand the coronavirus shutdown?
“People with credit card debt made the rest of the year much simpler for themselves by repaying a total of more than $60 billion in amounts owed during the first quarter of the year. Less debt means less stress, which is key at a time when our mental and physical health are already under unique strain. Debt is also a barrier to economic recovery. Having $60 billion less in credit card debt waiting for us means we’re $60 billion closer to having a thriving economy again,” said Jill Gonzalez, WalletHub analyst.
What can we expect from credit card debt levels during the rest of the year?
“Credit card debt will increase by $140 billion from April through December, leaving us with a net increase of $80 billion for the year. Those are big numbers, but it could be a lot worse, had it not been for Q1’s strong economy,” said Jill Gonzalez, WalletHub analyst. “Credit card debt levels may not rise quite as sharply as some people think given the near-record unemployment rate because credit card companies have tightened their underwriting considerably in the face of so much uncertainty regarding consumers’ ability to pay.”
