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

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  • Joanna Stavins

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.

Suggested Citation

  • Joanna Stavins, 2023. "Credit Card Spending and Borrowing since the Start of the COVID-19 Pandemic," Current Policy Perspectives 97187, Federal Reserve Bank of Boston.
    • Handle: RePEc:fip:fedbcq:97187
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    File URL: https://www.bostonfed.org/publications/current-policy-perspectives/2023/credit-card-spending-and-borrowing-since-the-start-of-the-covid-19-pandemic
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    File URL: https://www.bostonfed.org/-/media/Documents/Workingpapers/PDF/2023/cpp20231018.pdf
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    References listed on IDEAS

    as
    1. Omar Barbiero & Dhiren Patki, 2023. "Have US Households Depleted All the Excess Savings They Accumulated during the Pandemic?," Current Policy Perspectives 97263, Federal Reserve Bank of Boston.
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      More about this item

      Keywords

      credit card utilization; delinquencies; COVID-19;
      All these keywords.

      JEL classification:

      • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
      • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
      • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth

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