While overall balances on mortgages, auto loans, student loans and personal loans all continued their steady climb in 2020, credit card balances dropped, according to Experian.
For almost a decade, credit card balances have consistently ticked up, year after year. Until now, that is — and in the middle of a pandemic, no less.
Credit reporting agency Experian recently released its Consumer Credit Review, based on 2020 Q3 data, and it revealed a bit of a surprise. While the overall balances on mortgages, auto loans, student loans and personal loans all continued their steady climb, credit card balances dropped.
Not only did card balances move downward for the first time since 2011, but they dropped by a substantial 14%.
Mortgages, auto loans and personal loans had edged just slightly higher by the end of 2020’s third quarter, rising a modest 1-2%. Meanwhile, student loan balances saw the biggest increase, jumping 9%.
Only HELOCs joined credit card balances in dropping during 2020, with balances down 7%.
According to Experian data, U.S. cardholders have seen their average balance decrease by $879 in 2020, from $6,194 at the end of 2019 down to $5,315 in 2020 Q3.
Though Covid-19 has wreaked havoc on the economy and on many households’ finances, the mandatory lockdowns and business closures also stunted consumer spending. That combined with economic stimulus measures such as cash payments and debt relief may have contributed to consumers being able to pay down their card balances.
In addition, fewer cardholders are late on their payments. While the share of card accounts that were at least one month past due rose by 3% in 2019, it has dropped by 29% in 2020.
Experian’s analysis is based on aggregated credit report data, with its Q3 report released Jan. 4.