Corrects headline and lead to clarify that revolving credit is primarily but not exclusively credit card balances.
U.S. consumers’ total revolving credit balances fell 11.2% in 2020, reaching their lowest level in over three years, as the pandemic and a tough labor market pushed people to avoid debt.
In December, total revolving credit—made up mostly of credit card balances—fell 3.6% month over month, according to data released by the Federal Reserve on Friday. At $975.9 billion, balances haven’t been lower since April 2017 and have fallen $122.8 billion from their all-time high in February 2020. Except for a small increase in September, balances declined nine of the last 10 months of the year.
Consumers may be right in avoiding credit card debt as the pandemic is still very much impacting the economy.
The U.S. economy added just 49,000 jobs in January, and remains nearly 10 million jobs below where it was early last year, before the pandemic set in. Initial unemployment insurance claims have been stuck at three-to-four times pre-pandemic levels for months.