During the 2020 pandemic lockdown, many Americans found themselves spending significantly less of their disposable income, and some of that extra money went to paying down credit card debt at a record-setting pace last year.
The opposite is happening now.
In the second quarter of 2021, consumers added $47.5 billion in new credit card debt, an all-time quarterly record that nearly wiped out progress consumers made on their debt during the first quarter. And the spending on credit is expected to continue.
“We’re seeing a projection that consumers will end the year with a net addition of $100 billion in credit card debt. To put that into context, that is more than double of what we’re typically spending just in one year,” said Jill Gonzalez at D.C.-based personal finance site WalletHub, which recently released its 2021 credit card debt study.
The average household credit card debt in the second quarter in Virginia was $9,545, ranking in the top 10 among states. In Maryland, it was $9,282, which ranked No. 15. D.C. was not included in the rankings.
Gonzalez said some consumers are making up for lost time.
“Consumers have started to return to not-so-good habits. I think it’s a combination of that, and also just consumer enthusiasm about being able to go places and do things and ultimately spend money. And we certainly are spending money that we might not have,” she said.
The spike in credit card debt has not, as of yet, led to an increase in delinquencies. In the second quarter, the credit card charge-off rate, or balances lenders consider uncollectible, was 2.54%. That’s a 13.8% decrease compared to the first quarter of 2021.