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Research and Statistics

Fewer cardholders reported financial hardship in July after spring surge

TransUnion data show the pandemic’s sudden and dramatic effect on credit card users waned a bit over the summer

Summary

In April, the number of U.S. credit card holders reporting financial hardship skyrocketed, and increased further in May, according to TransUnion. Consumers’ financial distress appeared to wane by midsummer, though it remained high compared to pre-pandemic levels.

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In April, the number of U.S. credit card holders reporting financial hardship skyrocketed, and increased further in May.

TransUnion data on cardholders in financial hardship

It’s been trending slightly downward since that peak, but the share of cardholders registering bill payment distress is still 400 times higher than in March, before COVID-19’s economic fallout took hold.

The latest readings come from TransUnion’s relatively new Monthly Industry Snapshot Report, which it began compiling in May. TransUnion’s analysis defines accounts in financial hardship as those exhibiting factors such as a deferred payment, participation in a forbearance program, a frozen account or a frozen past due payment.

In its end of March 2020 reading, TransUnion reported that only seven cardholders out of every 100,000 were in a state of financial hardship. But after the coronavirus’ economic havoc set in, the share soared to 3,217 cardholders out of every 100,000 in April. It then climbed further to 3,727 in May.

See related: Will it hurt your credit if you ask your issuer for help?

After a modest decline in June, financial hardship accounts dropped as far as 2,827 in the July findings. Still, it’s legions above the single-digit rates seen pre-pandemic.

Fortunately, the credit card industry is seeing good news in delinquency rates and credit card balances. While late payments might have been expected to rise as a result of COVID-19’s employment impacts, card delinquencies of 30 days, 60 days and 90 days are all considerably lower than they were one year ago, likely a result of the various federal and lender programs that have been provided during the pandemic.

Credit card balances are also down. Though card issuers tightened credit over the second quarter, consumers also strove to pay down card balances. After rising the last couple of years, the average balance per cardholder dropped to $5,236 in July 2020 from $5,645 a year earlier.

TransUnion’s July 2020 Monthly Industry Snapshot Report is drawn from a stratified random sample of 5 million consumers obtained from the credit reporting agency’s proprietary research data. The July report was released Aug. 20.

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