Americans paid off billions in credit card debt in 2020

A study from personal finance website WalletHub released Monday found that American credit card debt dropped by a record $83 billion last year.

“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. 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,” WalletHub wrote in its analysis. 

 

Though credit card debt plunged last year as most of the country went into quarantine amid the coronavirus pandemic, WalletHub notes in its report that the average household debt remains high at $8,089 and the U.S. collectively owes more than $1 trillion to credit card companies.

The website compiled its report using data from the Census Bureau, Federal Reserve and TransUnion.

WalletHub analyst Jill Gonzalez told CNBC that this is only “the second time in the past 35 years we’ve even ended the year owing less credit card debt than we started with.” The first time was in 2009 in the midst of the Great Recession.

However, Gonzalez said that credit card spending will likely go up as coronavirus restrictions are lifted and more people are vaccinated. WalletHub projects that $50 billion in credit card debt will be amassed in 2021.

“The question is which way the pendulum swings in 2022 and beyond,” Gonzalez said. “My hope is that consumers will internalize lessons learned during the pandemic and showcase a newfound frugality.”