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

Joanna Stavins

Current Policy Perspectives from Federal Reserve Bank of Boston

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.

Keywords: credit card utilization; delinquencies; COVID-19 (search for similar items in EconPapers)
JEL-codes: D31 E21 G51 (search for similar items in EconPapers)
Pages: 15
Date: 2023-10-19
New Economics Papers: this item is included in nep-ban, nep-hea and nep-pay
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.bostonfed.org/publications/current-pol ... he-covid-19-pandemic Summary (text/html)
https://www.bostonfed.org/-/media/Documents/Workin ... 2023/cpp20231018.pdf Full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedbcq:97187

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Current Policy Perspectives from Federal Reserve Bank of Boston Contact information at EDIRC.
Bibliographic data for series maintained by Catherine Spozio ().