Household debt has risen substantially in 2020 thus far, shooting up to $14.3 trillion, a number bypassing the height of the Great Recession by $1.6 trillion, according to a CNBC report that cited the New York Federal Reserve.
However, credit card balances have dropped compared to before the coronavirus pandemic. That can be attributed to the slowdown in consumer spending as many people stay home.
That decrease in credit card balances comes even as the credit limits have been increased by $34 billion, leaving $3 trillion available in credit card lines.
The general population has been playing it safe with spending, including with the federal stimulus money sent out to individuals in April. Many people, expecting the impact of the pandemic to be long-lasting, have been spending less. Large percentages are eating out less and even grocery shopping less. And the general mood of the public indicates many people intend to change their habits and spend less time out of the house even after the pandemic passes.
Almost one-in-four credit card holders reported that their credit limits had been slashed or their cards shut down as banks have had to hit the brakes on lending activity.
The changes were disproportionately skewed young, as over 30 percent of Gen Z, millennial and Gen X credit card holders reported the new restrictions, while only around 8 percent of baby boomers said they’d had it happen to them. But around 40 percent of Americans were also unaware that this kind of change was possible.
Student loan debt now sits at $1.54 trillion with numerous delinquencies due to the pandemic’s disruptions, although the overall debt delinquency has gone down to 4.6 percent, CNBC reported.
In the Great Recession, during the third quarter of 2008, the previous record of $12.7 trillion in household debt was reached.