Credit Card Debt Drops Sharply in 2nd Quarter of 2020

In uncertain times, people are spending less and using stimulus money to pay down their existing balances.

Erin El IssaAugust 14, 2020
Credit Card Debt Drops Sharply in 2nd Quarter of 2020

Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own.

Household debt declined slightly overall from the first quarter of 2020 to the second — but revolving credit card debt saw a significant drop.

In a typical year, credit card debt goes down in the first quarter as people pay off holiday bills, then increases slightly in the second quarter, NerdWallet research has found. But 2020 has been a year of anomalies.

During the period from April through June, overall household debt shrunk by 0.72% or close to $1,000 among households carrying any type of debt. Revolving credit card debt — meaning balances carried from one month to the next — went down by 9.15%, or more than $600 per household with this debt type.

“With so much financial uncertainty and job loss in the second quarter of the year, consumers are spending less and using stimulus money to reduce debt," says Sara Rathner, NerdWallet’s credit card expert. "These are smart moves to make when you’re forced to cut back.”

Average balance for households with each type of debt:

Q1 2020

Q2 2020

Percentage change

Credit cards (revolving)

$6,741

$6,124

–9.15%

Mortgages

$195,967

$197,445

+0.75%

Auto loans

$27,978

$27,649

–1.18%

Student loans

$46,954

$46,459

–1.05%

Any type of debt

$138,722

$137,729

–0.72%

We want to hear from you and encourage a lively discussion among our users. Please help us keep our site clean and safe by following our posting guidelines, and avoid disclosing personal or sensitive information such as bank account or phone numbers. Any comments posted under NerdWallet’s official account are not reviewed or endorsed by representatives of financial institutions affiliated with the reviewed products, unless explicitly stated otherwise.