After a record-setting year for credit card debt reduction in 2020, U.S. consumers maintained their strong performance during the first quarter of 2021, paying off $56.5 billion in credit card debt, according to the personal-finance website WalletHub’s latest Credit Card Debt Study, released today.
Although credit card debt levels are becoming more manageable nationwide, some areas have bigger payment problems than others. With that in mind, WalletHub compared more than 180 of the largest cities based on how much residents owe to credit card companies – specifically, how those balances changed in Q1.
Please find key takeaways below, along with commentary from WalletHub experts (audio and video files included).
|Cities with the Biggest Debt Paydown||Cities with the Smallest Debt Paydown|
|Santa Clarita, CA||Fargo, ND|
|New York, NY||Buffalo, NY|
|Chesapeake, VA||Akron, OH|
|Chula Vista, CA||Cedar Rapids, IA|
|Pembroke Pines, FL||Milwaukee, WI|
|Pearl City, HI||Toledo, OH|
|Santa Ana, CA||Cleveland, OH|
|Virginia Beach, VA||Lewiston, ME|
|Rancho Cucamonga, CA||Madison, WI|
|Plano, TX||Detroit, MI|
Credit Card Debt Study Key Stats:
- Continued Debt Reduction. Credit card debt decreased by $56.5 billion during Q1 2021, following a record paydown of $82.1 billion in 2020.
- Bigger Paydown Than Normal. Consumers’ Q1 2021 credit card debt paydown was 51% larger than the post-Great Recession average for a first quarter.
- Rising Charge-Offs. At 2.95% for Q1 2021, the credit card charge-off rate is up by 14.3% compared to last quarter.
- Ease Your Debt. The best balance transfer credit cards currently offer 0% APRs for the first 15-20 months with no annual fee and balance transfer fees as low as 3%.
Q&A with WalletHub
What do the latest credit card debt statistics tell us about the health of U.S. consumers?
“The newest data on credit card debt indicate that U.S. consumers are in good shape financially. Consumers finished 2020 with a record annual paydown of $82.1 billion and picked up right where they started in 2021, shedding $56.5 billion in credit card debt during the first quarter,” said Jill Gonzalez, WalletHub analyst. “It’s common for credit card debt to drop during the first three months of the year, but the drop we observed this year is the second largest ever, so we’re definitely on a strong trajectory.”
How will credit card debt levels look for the rest of 2021?
“Credit card debt will likely increase by around $60 billion during 2021, even after a $56.5 billion first-quarter paydown,” said Jill Gonzalez, WalletHub analyst. “It’s hard to imagine a scenario in which debt would not increase somewhat in the short term as the economy continues to reopen, extra unemployment benefits roll back, and consumers make up for lost time when it comes to spending.”
What advice do you have for people trying to get rid of credit card debt?
“People trying to get rid of credit card debt should consider both the spending and repayment sides of the equation. Making a budget that cuts out unnecessary luxuries and maximizes monthly debt payments will be a big help, as will taking steps to boost your income,” said Jill Gonzalez, WalletHub analyst. “The next step is to focus your attention on your most expensive debt, as paying that off first will save you the most money in the long run. Additionally, people trying to get rid of credit card debt should look into 0% balance transfer credit cards. The right balance transfer credit card offer could save you a lot of money on interest and help you get out of debt sooner.”