Credit Card Spending and Borrowing since the Start of the COVID-19 Pandemic

Abstract: Consumers improved their financial health early during the COVID-19 pandemic, but credit card revolving and delinquencies have been rising since 2021, in terms of both the share of accounts and average balances. Financial stress is especially high among lower-income cardholders, whose credit card revolving and delinquencies have risen faster than those of other income cohorts. This is consistent with excess savings being depleted faster among lower-income cohorts. The rising financial stress suggests a weakening in consumption as utilization rates, revolving amounts, and delinquencies all continue to rise. Balances on delinquent accounts held by lower-income consumers are approaching their credit limits. With utilization rates of 80 to 90 percent on average, these cardholders might have to cut their spending. An unemployment spell might cause further distress for these individuals and potentially others who are not currently delinquent.

Keywords: credit card utilization; delinquencies; COVID-19;

JEL Classification: D31; E21; G51;

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Bibliographic Information

Provider: Federal Reserve Bank of Boston

Part of Series: Current Policy Perspectives

Publication Date: 2023-10-19