JASMA

Remember March 2020? One day you were buying $6 lattes and thinking “I deserve this,” and the next day your calendar was empty,
your commute was canceled, and your wallet basically went into lockdown too.

Something surprising happened in that chaos: the average credit card balance dropped. Not for everyone, not forever,
but enough to show up in national data. It was a rare moment when millions of people collectively hit pause, spent less, andoften
for the first time in a long timewatched their balances shrink instead of multiplying like gremlins after midnight.

Quick Take: What the Numbers Said

Several major U.S. credit and economic data sources all pointed in the same direction during the pandemic’s early stretch:
revolving credit and reported card balances fell sharply.

If that table feels like financial whiplash, you’re not alone. The pandemic changed how people spent money, how much cash they had
on hand, and how they treated debtat least temporarily.

What “Average Credit Card Balance” Really Means

Before we get too excited and start imagining America collectively paying off debt while singing motivational ballads:
“average credit card balance” can mean slightly different things depending on the dataset.

Two common ways it’s measured

• Credit-report averages: Based on what appears on consumer credit files (e.g., average balance per consumer with credit cards).
• Borrower-level averages: Focused on people who carry a balance (revolvers) or borrower-level figures reported by credit bureaus/industry.

Either way, the big story is the same: during the pandemic’s early period, fewer dollars were sitting on credit cards,
and in many cases, fewer people were carrying balances month to month.

Why Balances Fell: The Pandemic Perfect Storm (Yes, Really)

A falling average balance doesn’t happen because the universe suddenly becomes financially responsible. It happens when
a bunch of forces line up at the same timelike a solar eclipse, but for personal finance.

1) Spending dropped fast (and weirdly)

The most obvious factor: people just spent less. Travel stopped. Restaurants closed. Events were canceled.
Even basic “I’m bored” shopping slowed for a while because nobody knew what was coming next (or whether paper towels
were about to become the next global currency).

When major spending categories disappear overnight, credit card swipes disappear too. That alone can shrink balances,
especially for households that usually run a portion of monthly spending through cards.

2) Stimulus and expanded benefits increased cash flow for many households

Pandemic-era relief policies didn’t reach everyone equally, but many households received cash infusions through
economic impact payments and expanded unemployment benefits. For a portion of Americansespecially those whose
expenses droppedthis created breathing room.

And when people have breathing room, they do something shockingly mature: they pay bills. Sometimes even the credit card bill.
(Growth!)

3) The savings rate skyrocketed, which usually pairs with less revolving debt

One of the clearest “behavior change” signals was the personal saving rate spiking in early 2020.
Saving more often goes hand in hand with borrowing lessbecause your emergency fund stops being “a vibe”
and starts being actual dollars.

4) Lenders tightened, consumers hesitated

Banks and issuers didn’t exactly throw a “free money” parade. Many tightened underwriting, reduced credit lines
on some accounts, and became more conservative about new approvals.

At the same time, consumers got cautious. Uncertainty has a funny way of making even the most enthusiastic
rewards-chaser think, “Maybe I don’t need that third streaming service.”

5) Relief programs and accommodations reduced short-term stress signals

Issuers offered deferrals and fee waivers for some cardholders, and policy supports (like forbearance in other markets)
helped some households avoid cascading financial stress.

Even if accommodations don’t directly lower balances, they can prevent a spirallate fees, penalty APRs, and
“now everything is on fire” budgeting.

Who Saw the Biggest Drops (and Who Didn’t)

“Average balance fell” is a headline. Real life is messier. Some people paid down debt aggressively; others leaned on cards
harder because income vanished. Both things can be true at the same time.

Households that often benefited

• Higher earners who cut discretionary spending (travel, dining, entertainment) and kept stable income.
• People commuting less (gas, parking, lunches, impulse purchasesgone).
• Borrowers who used stimulus as a reset button to pay down revolving debt and rebuild cash buffers.

Households that often struggled

• Workers in hard-hit sectors who faced job loss or reduced hours and used credit cards to cover essentials.
• Families with childcare disruptions and higher at-home costs.
• Borrowers already carrying high-interest balances, where even small shocks can trigger bigger debt growth.

This is why averages matterbut also why they can be misleading. A drop in the average can happen even while a subset of households
experiences serious hardship.

What It Meant for Credit Scores and Financial Health

Lower balances can help credit scores because they often reduce credit utilizationthe percent of your available credit
you’re using. Utilization is one of the most influential factors in common scoring models.

Lower utilization can create a “score tailwind”

When balances drop and credit limits stay the same, utilization improves. That can raise scores, making it easier to qualify
for better loan terms, refinance, or get approved for new credit.

But the “good news” had an asterisk

A higher score doesn’t automatically mean a higher paycheck or lower grocery bill. Many consumers did the right things
during the pandemic because the world forced different choicesless spending, more cash flow support, fewer “normal” temptations.
When the world reopened (and inflation arrived like an uninvited guest who refuses to leave), balances began climbing again.

So… Was It a Financial Win?

For some people, yes. The pandemic created a window where paying down debt was possibleand sometimes surprisingly fast.
For others, no. Credit cards remained a lifeline, not a strategy.

The healthiest takeaway is this: the pandemic showed that cash flow and spending patterns drive credit card debt more than
willpower alone. When spending drops and cash rises, balances fall. When prices rise and savings shrink, balances climb.
Not magicalmechanical.

How to Keep Your Credit Card Balance Lower (Even When Life Is Normal Again)

You don’t need a global lockdown to get the benefits of a lower balance. You just need a system that makes “paying down debt”
easier than “accidentally financing your DoorDash habit at 24% APR.”

Try the “pandemic effect” in a non-pandemic way

1. Automate a “minimum + extra” payment: pay the minimum plus a fixed amount (even $25–$100). Consistency beats intensity.
2. Pick a payoff method:
   • Debt avalanche (highest APR first) saves the most interest.
   • Debt snowball (smallest balance first) builds momentum fast.
3. Protect your utilization: if your score matters soon, try to keep utilization under ~30% (lower can be better).
4. Build a small buffer: even $500–$1,000 in emergency cash can prevent the “oops, new tire” balance from becoming a year-long roommate.
5. Audit subscriptions and “quiet spending”: the pandemic killed a lot of convenience spending. You can do the sameselectively.

FAQ

Why did credit card balances drop so much in 2020?

The combination of reduced spending opportunities, relief-driven cash flow for many households, increased savings,
and consumer caution led to less revolving debt overall.

Does a lower balance always mean people were better off?

Not always. Some households paid down debt because they had more cash and fewer expenses. Others relied on cards
because income fell. Averages can hide unequal outcomes.

Did balances stay low after 2020?

Not permanently. As the economy reopened and inflation squeezed budgets, many households returned to using credit cards more,
and total balances eventually climbed back toward (and later beyond) pre-pandemic levels.

Conclusion: The Big Lesson Hidden in the Drop

The pandemic didn’t “fix” credit card debt, but it did reveal something important: when spending patterns change and cash flow improves,
credit card balances can fall quickly. For many Americans, the decline was realvisible in national data and in everyday budgets.

The goal now is to keep the useful parts (intentional spending, automatic extra payments, building buffers) without needing the
less-fun parts (global crisis, sourdough starter obsession, and arguing about whether a mask counts as a fashion accessory).
If the average balance can sink once, it can sink againthis time on purpose.

Real-World Experiences During the Pandemic (500+ Words)

Data tells you what happened. Real life tells you how it felt. During the pandemic, common credit card “storylines” repeated across
householdssometimes in the same family, just in different months.

Experience #1: “My expenses disappeared… so I attacked my balance.”

For plenty of office workers and professionals, the most dramatic change wasn’t incomeit was lifestyle. No commuting. No lunch runs.
No weekend travel. Even small daily habits (coffee, snacks, quick retail therapy) faded when life moved indoors. Many people looked at
their credit card statement and realized, “Wait… this is beatable.” They redirected those “vanished” expenses into a bigger monthly payment.
The emotional win mattered as much as the math: watching a balance drop created momentum, and momentum is basically financial rocket fuel.
This group often described the payoff like decluttering a closetonce you start, you can’t stop. “If I can clear this card, maybe I can
finally build an emergency fund.” That mindset shift was one of the most valuable outcomes of the period.

Experience #2: “Stimulus arrived and I didn’t ‘treat myself’… I treated my APR.”

Another shared experience: receiving pandemic assistance and choosing to use at least part of it to pay down revolving debt. People talked
about the temptationnew electronics, home upgrades, a cart full of “pandemic hobbies” they would never touch again. But many made a
practical choice: eliminate the highest-interest balance first. The payoff wasn’t glamorous, but it was powerful. Dropping utilization and
lowering interest costs gave them room to breathe. Some also used a “split strategy”: one portion for essentials, one portion for savings,
and one portion for debt. It wasn’t perfection; it was stability. That stability reduced the likelihood of missing payments later, which
can matter just as much as the balance itself.

Experience #3: “I used my card for groceriesthen got stuck.”

For households hit by layoffs, reduced hours, or unstable gig work, the story was different. Credit cards became the bridge between
necessities and uncertain income. Groceries, utilities, and car repairs don’t pause for pandemics. In these cases, balances didn’t sink
they sometimes rose, and the stress came from not knowing when relief would arrive or whether a job would return. Many people in this
situation described juggling minimum payments across multiple cards and feeling trapped by interest charges. Their “pandemic lesson” was
less about optimization and more about resilience: negotiating hardship programs, prioritizing essential bills, and avoiding new high-cost
debt where possible. It also highlighted a reality averages can hide: a national decline can still include millions of households experiencing
acute financial pressure.

Experience #4: “I paid it down… then life reopened and the balance crept back.”

A final common arc: people successfully lowered balances in 2020–2021, then watched them climb again as normal life resumed.
Travel returned. Celebrations returned. Prices rose. Savings buffers shrank. Credit cardsconvenient, fast, and dangerously easyfilled the gap.
For many, the best “post-pandemic upgrade” was building guardrails: setting spending alerts, keeping one card for fixed bills, using a debit
card for day-to-day purchases, or scheduling an automatic extra payment right after payday. The experience taught an important truth:
debt reduction is rarely a one-time event. It’s a system you maintain, like brushing your teethannoying, necessary, and much cheaper than
the alternative.