In a highly unusual economic climate, a highly unusual thing is occurring in the United States… Credit card debt is actually declining during the current recession! In fact, for the first time in years, total American credit card debt has now dropped below the $1 trillion mark. So, why is this so important, you ask?
Actually, this decline in credit card debt indicates drastic changes in consumer behavior as the pandemic rages on around the world. For example, with the shutdown of restaurants, bars, and other entertainment venues, Americans are definitely swiping that credit card a lot less! Then, factor in the job losses, and what do you have? Not only is the money not there to spend, but people are working extremely hard NOT to spend the money they do have (and not to rack up balances on credit cards, either).
Of course, all of this “declining debt” may soon change as the Federal Unemployment Insurance benefits expire later this week, and more people run out of money for day to day expenses. That means the recent plunge in debt may be short lived, at least until another stimulus package is agreed upon.