Number of the Day
Why Credit Card Debt Is Shrinking, By the Numbers
Despite a recession and high unemployment, Americans have been paying off their credit cards. But can it last?
$100 billion: That’s the amount that U.S. credit card debt fell from February to June. Yes, you read that right: In the throes of a pandemic-fueled economic collapse that has left around 30 million Americans unemployed and GDP down 9.5% in Q2, U.S. credit card holders have, in the aggregate, paid down their debts. Obviously, the experts expected the opposite — that massive unemployment would lead to a spike in living off plastic. But according to Wall Street Journal analysis, government stimulus checks and additional unemployment benefits have provided an effective cushion for many.
But that’s not the whole story. The economy also seems to be bifurcating even more than usual, with one part of the workforce that transitioned to working-at-home driving up the savings rate because there is simply less opportunity to spend, and another part scrambling for a new gig, hoping that the government will get its act together and implement some new round of relief. Right now, the split between those two drastically different scenarios is obscured by the top-line numbers. But that split is likely to become more obvious, and soon.
Place your bets: Will legislators prove as responsible as credit card holders seem to be?
