Credit card holders in Illinois have reduced balances this past year, a surprising turn of events amid the COVID-19 pandemic.
According to Experian, the average credit card balance in Illinois dropped 14% in 2020 from $6,253 to $5,365. Overall credit card debt in the U.S. dropped as well, marking the first time in 7 years that any major consumer debt category decreased.
Nathan Grant, senior credit industry analyst with Credit Card Insider, said the pandemic put consumers on the defensive.
“People are still using credit, unfortunately leaning on it for emergency situations and stuff, but they really took a step back and looked at things, like spending on things that maybe are not that important,” Grant said.
Since 2019, outstanding credit card debt has dropped by 9%, bringing the total for Q3 2020 to $756 billion, according to Experian data. The drop represents more than $73 billion in balances that consumers paid down in the past year.
Grant said credit cards will play a pivotal role in the shift in consumer spending.
“I thought that was interesting to see is that even though the credit card use is going down, the need for credit cards for online shopping is staying pretty strong,” Grant said.
U.S. online purchases over the 2020 holidays grew over 32% from the year before, totaling a record $188.2 billion as shoppers stayed home and surfed the web during the pandemic, according to Adobe Analytics.
For those who were not bale to reduce their credit card debt in 202, Grant suggests a balance transfer card.
“There are some balance transfer cards with no transfer fees, and then there are some even with the fees you are getting a longer time to pay off your balance with no interest which might be a better option,” he said.
Consumers in Washington D.C. saw the largest average balance decrease, with credit card debt shrinking by 20% in the past year. On the other hand, consumers in North Dakota saw their credit card balances reduce by 8%, the lowest in the country.
Credit card holders in Iowa have the lowest average balance in the country at $4,289, while consumers in Alaska have the highest at $6,617.
View original Post