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As the pandemic put a damper on many activities, people reduced balances by a record sum, a new study finds.
Consumers repaid $82.9 billion in credit card debt during 2020, setting an all-time record, according to the personal-finance website WalletHub’s latest credit card debt study.
The pay down is notable given that consumers racked up an average of $54 billion in credit card debt annually over the past decade. Last year, consumers reversed that trend. There was a net increase in credit card debt of $36 billion during the fourth quarter, the report says. But it adds that this is the smallest increase in 10 years and down from $57 billion in the final quarter of 2019.
At the end of 2020, according to the report’s findings, the average household credit card balance was $8,089.
The five cities that had the biggest debt pay downs in 2020 were: Oxnard, California (-$1,270), West Valley City, Utah (-$1,234), Augusta, Georgia (-$1,184), Pearl City, Hawaii (-$1,147) and Shreveport, Louisiana (-$1,602).
On the other end of the spectrum, the places with the biggest balance increases included: Burlington, Vermont ($3,020), Lewiston, Maine ($948), Fort Smith, Arkansas ($947), Pembroke Pines, Florida ($930) and Norfolk, Virginia ($871).
“Paying off so much credit card debt indicates that consumers have been making the most of the pandemic, by using the stimulus money and covid restrictions to make their finances more sustainable,” WalletHub analyst Jill Gonzalez said in a statement.
It’s questionable to what degree the decline in credit card debt will extend beyond the pandemic as people resume more normal day-to-day activities. WalletHub’s survey found that almost 35% of Americans said that Covid-19 made it more difficult to run up serious balances.
Gonzalez noted that WalletHub estimates consumers will add around $50 billion in credit card debt this year. “A short-term burst of spending is inevitable as pandemic restrictions are lifted,” she said. “The question is which way the pendulum swings in 2022 and beyond.”
More about the study can be found here.
Brent Woodie is an associate editor at Route Fifty.