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:
Credit cards (revolving)
Any type of debt