Americans credit card debt is ticking back up

Early in the pandemic, there were encouraging and surprising signs about the decline of credit card debt.

Now, that trendline seems to be changing.

Many Americans stayed at home at the start of COVID-19 and did not spend like they usually do. They also received several rounds of emergency cash assistance, helping to chop away at those credit-card bills, at least temporarily.

Spending is ticking back up – and the results are starting to show up on our monthly statements.

In fact, 42% of those with credit card debt, or 59 million Americans, say they have added to their balances since the beginning of the pandemic, according to a new study by personal finance site Bankrate.com.

“Things are better for some, but they are not better for everybody,” explains Ted Rossman, Bankrate’s senior industry analyst.

The end of stimulus checks, expanded unemployment benefits and the eviction moratorium does not bode well for debt management, Rossman added.

This trend reversal is reflected in the most recent numbers of the Federal Reserve Bank of New York. Its Quarterly Report on Household Debt and Credit found that credit-card bills rose by $17 billion in 2021’s second quarter, to $790 billion nationally. That was the first uptick after four straight quarters of declines.

Also headed north were auto loans, by $33 billion in the quarter, and mortgage debt, by $282 billion. All told it makes for total household debt of $14.96 trillion, a quarterly rise of 2.1 per cent.

Of course, not all debt is the same, nor should it automatically be considered a bad thing. The rise in mortgage debt can be attributed to many people buying homes in a hot real estate market – and with interest rates near historic lows, that is not necessarily a concern for household balance sheets.