Declines in Credit Unions’ Credit Card Debt Mirror Broader Trend

According to a new report from WalletHub, Americans have paid down more than $118 billion of credit card debt in 2020, eliminating all of the sector’s 2019 gains. Total credit card debt fell 7.6 percent to $934.8 billion.

“Americans began 2020 owing more than $1 trillion in credit card debt after a $76.7 billion net increase during 2019,” the report reads. “Consumers quickly changed course, however, posting the biggest first-quarter credit card debt paydown ever, at $60 billion.”

At the end of the second quarter, WalletHub’s data showed an 8.2 percent year-over-year decrease in average household credit card debt, falling to just over $7,900. Although paydowns are typical, this is the first time in more than 30 years that credit card debt has declined in the second quarter, decreasing 6.7 percent compared to the first quarter.

The report mirrors recent data from the National Credit Union Administration (NCUA), which showed a 2.4 percent year-over-year decline in credit balances, falling to $60.9 billion at the end of June. Credit cards have been slow to grow as a percentage of assets; the NCUA reported the figure at 3.5 percent, down from 3.9 percent at the end of the first quarter, and 4.2 percent at the end of 2019.

Additionally, overall credit card charge-offs at the end of the second quarter stood at 4.04 percent, a 3.3 percent rise from the first quarter, according to WalletHub’s data.

“As a result, WalletHub now projects that U.S. consumers will end the year with a slight reduction in credit card debt for the first time since the end of the Great Recession in 2009,” the report reads.