*HomeU.S. Government Accountability Office*
Menu

      close


          
          
                          	
				
				
	
	
					Reports & Testimonies
									
																				
				
				
	
	
								Reports & Testimonies
													
																												
																						
							
																Recommendations Database
							
																												
																						
							
																Month in Review
							
																												
																						
							
																Order Copies
							
																												
																						
							
																Restricted Reports
							
																												
																						
							
																View Topics
							
																												
																						
							
																View Agencies
							
																												
																						
							
																Bid Protests & Appropriations Law
									
																				
				
				
	
	
								Bid Protests & Appropriations Law
													
																												
																						
							
																Bid Protests
							
																												
																						
							
																Appropriations Law
							
																												
																						
							
																Federal Vacancies Reform Act
							
																												
																						
							
																Other Legal
							
																												
																						
							
																About
									
																				
				
				
	
	
								About
													
																												
																						
							
																What GAO Does
							
																												
																						
							
																U.S. Comptroller General
							
																												
																						
							
																Careers
							
																												
																						
							
																Contact UsFor Congress
                                
                          
        
                Press Center
                                
                          
        
                Careers
                                
                          
        
                BlogSearch < WatchBlog: Following the Federal Dollar
    American Credit Card Debt Hits a New Record—What’s Changed Post-Pandemic? Posted on October 31, 2023
                    It’s Halloween! And while you may be thinking of goblins and ghosts, nothing can haunt you the way credit card debt does. While consumers’ credit card debt dropped during COVID, signs point to it starting to crawl back to pre-pandemic levels. And over the summer, credit card usage in the U.S. reached a new milestone—with balances totaling over $1 trillion.

Credit cards are widely used in the United States. The vast majority of adults in the U.S. (82%) have at least one credit card in their wallets. As debt levels grow, today’s WatchBlog post looks at our new report on credit card debt and some of the factors that may result in some having more debt than others.

Image
              Stock image of a stack of credit cards.

**The ups and downs of pandemic era credit card debt**

What do we know about credit card use before the pandemic? A lot actually. In the years before the pandemic—but after the financial crisis (2013-2019)—about half of active credit card accounts carried a balance from one month to the next. In other words, the cardholder wasn’t paying off the full balance each month. Even cardholders with high credit scores (above 720) and high household incomes (more than $150,000) were not immune to carrying credit card debt.

Many cardholders owed over $1,500 on their cards and many carried a balance for at least a year. Those who paid off their balances were more likely to use their cards. And up to 11% of cardholders who carried a balance reached or exceeded their credit limits in a given month.

When the pandemic hit the U.S., our economy saw dramatic changes in spending as well as credit card use. This was in part due to the federal government’s response. From April 2020 to December 2021, the federal government provided a number of payments to individuals impacted by COVID’s economic effects. This included, for some, multiple stimulus checks, advance child tax credit payments, and unemployment insurance.

The federal government also paused some payments that had previously reduced some Americans’ available funds. Notably, some types of mortgage payments and federal student loan payments were paused.

In our new report, we found that many people likely used their pandemic stimulus payments to pay down their credit card debt. We estimated that cardholders increased their credit card payments by $20 and $61 on average when the second and third stimulus checks were disbursed.  The payment amount also increased by $37 in each month on average when the advance child tax credit payments were disbursed.

**Median Normal Credit Card Revolving Balances, 2020-2021**

Image
              Line graph showing how credit card balances changed (declined in amount) during COVID.

In fact, during the pandemic, the share of cardholders who paid off their credit card debt reached the highest in recent years. Specifically, the share of all active accounts that carried a balance declined from 50% to 45% from April 2020 to December 2021.

**Percentage of Active Credit Card Accounts That Carried a Balance, 2019-2021**

Image
              Timeline showing the change in percentage of credit cards that carried a balance between Jan 2019 and Nov 2021.

We also found that late payment and default rates fell to historic lows, most notably for consumers with credit scores below 620. We observed better credit scores and fewer delinquencies among cardholders during the pandemic.

But now that the pandemic is over, we’ve returned to normalcy—which, in addition to student loans and mortgage payments restarting—has also included the return of higher credit card use and, potentially, more cardholders slipping into debt.

**Do credit card terms vary with the racial makeup of cardholders’ neighborhoods?**

A lot of factors can impact an individual’s use of credit cards. But in our report, we specifically looked at race-related differences in credit limits, debt levels, and interest rates for those with credit cards.

Our analysis suggests that credit terms for a large sample of cardholders in majority Black or African American and Hispanic or Latino zip codes were likely worse than those in predominantly White zip codes. That is, cardholders in majority Black and Hispanic zip codes likely had lower credit card limits and paid higher interest rates.

Other factors can impact credit limits and interest rates—for example, things like credit scores and income. But even factoring for those, we found that differences still existed across neighborhoods with different racial makeups.

We compared a sample of cardholders in majority Black and Hispanic zip codes to those in predominantly White zip codes. Our analysis suggests:

**Credit limits** for cardholders in majority Black and Hispanic zip codes were on average about $3,412 and $4,285 lower, respectively.
	**Interest rates** for cardholders in majority Black and Hispanic zip codes were on average about 1.3 and 1.4 percentage points higher, respectively.

**Estimated Average Interest Rate Differences for Cardholder Accounts by Race and Ethnicity of Billing Zip Codes, June 2013–December 2021**

Image
              Estimated average interest rate differences for cardholder accounts by race and ethnicity of billing zip codes between June 2013 and December 2021

Lower credit limits and higher interest rates can make credit more expensive. This means that it’s more expensive for some to use their credit cards. When we looked at credit card use among majority Black and Hispanic zip codes in our data sample, we found that these credit card users owed less on their cards but carried that balance for a longer period than accounts in predominantly White zip codes. Although these card users carried less debt, they may have to pay more interest because they carried the debt longer. If these card users also have a lower credit limit, their credit utilization rate—the percent of their available credit in use—is higher. This can lead to lower credit scores and a higher cost of credit across the board.

Learn more about our work on demographic factors in credit card debt, as well as overall credit card usage by checking out our new report.

GAO’s fact-based, nonpartisan information helps Congress and federal agencies improve government. The WatchBlog lets us contextualize GAO’s work a little more for the public. Check out more of our posts at GAO.gov/blog.
TopicsFinancial Markets and Institutions
                        Credit card debt
              Credit cards
              Pandemic
              Coronavirus
                        Financial Markets and Community Investment
GAO Contacts
    
      Alicia Puente Cackley
      
              Alicia Puente Cackley
            
            Director
      
            cackleya@gao.gov
      
            (202) 512-8678
		
					Related Posts
		
			Photo showing a medical worker injecting a COVID vaccine into a woman's arm with others standing by awaiting vaccinations.
          Blog Post
              For World Health Day (April 7), We Look At U.S. Efforts to Promote Global Wellness
            Thursday, April 4, 2024
      
            When it comes to communicable diseases, it turns out, it is a small world after all. Serious...
          Graphic showing how antiviral drugs fight viruses.
          Blog Post
              In the Next Pandemic Antiviral Drugs Could Be Key, But Are They Ready?
            Wednesday, October 4, 2023
      
            Scientists say another pandemic is likely and have even identified several viruses that could be a...
          $100 bills. Source: Harry HU/stock.adobe.com.
          Blog Post
              Protecting Emergency Assistance Funding from Payment Errors, Including Fraud
            Thursday, July 13, 2023
      
            Federal emergency assistance is a critical resource for helping communities, businesses, and...

Related Products
					Credit Cards: Pandemic Assistance Likely Helped Reduce Balances, and Credit Terms Varied Among Demographic GroupsProduct Number
              GAO-23-105269

	Published:  Sep 29, 2023


	Publicly Released: Oct 30, 2023
About WatchblogGAO's mission is to provide Congress with fact-based, nonpartisan information that can help improve federal government performance and ensure accountability for the benefit of the American people. GAO launched its WatchBlog in January, 2014, as part of its continuing effort to reach its audiences—Congress and the American people—where they are currently looking for information.

The blog format allows GAO to provide a little more context about its work than it can offer on its other social media platforms. Posts will tie GAO work to current events and the news; show how GAO’s work is affecting agencies or legislation; highlight reports, testimonies, and issue areas where GAO does work; and provide information about GAO itself, among other things.

Please send any feedback on GAO's WatchBlog to blog@gao.gov.
 Receive GAO Updates
  Stay informed as we add new reports & testimonies.

    GAO Logo
      U.S. Government Accountability Office


                                   Column 1
                            Press Center
                              Contact Us
                              Inspector General
                              Restricted Reports
                              Column 2
                            Copyright & Terms of Use
                              Privacy Policy
                              Accessibility
                              Sitemap
                              Column 3
                            FOIA Requests
                              Scam Alerts
                              No FEAR Act Data
                              Health Care Advisory Committees