CFPB Report Finds Record Declines in Credit Card Debt in 2020

The Consumer Financial Protection Bureau (CFPB) recently released its fifth biennial Consumer Credit Card Market report to Congress, finding that after years of growth, credit card debt fell to $811 billion by the second quarter of 2020, the biggest six-month decline on record. It then rose to $825 billion by the end of 2020.

“While public and private programs helped consumers bring down their credit card debt during the pandemic, we at the CFPB will be watching to make sure families and individuals still struggling get the assistance they need,” said Acting Director Dave Uejio. “Across the credit card market, consumers sought and used less credit, paid down debt, and dropped late payment rates to historic lows. As pandemic relief efforts end, the CFPB will be using all our tools to support an equitable recovery.”

The report found that more than 25 million consumer credit card accounts, representing roughly $68 billion in outstanding credit card debt, entered relief programs in 2020. The share of accounts with a revolving balance fell in 2020 as more consumers paid down their debt and existing cardholders paid off the highest shares of their debt.

Additionally, credit card application volume fell sharply from its peak level in 2019. Late payment and default rates also fell to historic lows, especially for consumers with below-prime scores. Those consumers also saw the biggest constriction in available credit card lines, even as utilization of those lines fell.

The report found that credit card issuers made less debt collection phone calls for delinquent credit card accounts, and instead increased the use of emails in collection. Consumers more frequently enrolled in mobile apps, and opted in for e-statements and electronic credit card bill payments.

The CFPB said the report reflects the agency’s work to ensure consumer protection and transparency in the marketplace. The Bureau also plans to increase its use of demographic data in future research.

The full report is available here.