Where Americans Made the Biggest Dent in Their Credit Card Debt

Americans aggressively paid down their credit card balances in 2020. The uncertainty and economic shutdowns brought on by the pandemic drove many to reassess and stabilize their finances. Collectively, credit card balances are $140 billion lower than they had been at the end of 2019. Despite a recent uptick by $17 billion, Americans currently owe approximately $790 billion in credit card debt, according to the NY Federal Reserve.

This paydown trend carried through across all 50 states and the District of Columbia. Looking at the change in credit card debt per capita from Q4 2019 and Q4 2020, card balances fell between $760 and $140 dollars. This represents approximately a year-over-year percentage change of 17% to 12%. 

The states that made the biggest dents in their credit card debt were also the ones with much higher starting balances. However, decreases were not completely proportional. In Washington D.C. where credit card debt is amongst the highest in the nation, balances fell the most. Credit card debt per capita in the region decreased by 16.7% year-over-year to $3,900 in Q4 2020 from $4,420 in Q4 2019. Meanwhile, Alaska, which has the highest per capita credit card debt, only cut their debt by 12.6% year-over-year to $3,900 in Q4 2020 from $4,440. 

Meanwhile, the states with smaller per capita credit card debt generally saw the smallest decreases in 2020. Mississippi, which has the lowest credit card debt per capita, only decreased their collective balances by 7.1% year-over-year to $2,080 in Q4 2020 from $2,240 in Q4 2019. The main exceptions were Florida and Georgia, which ranked #16 and #22 respectively in highest per capita credit card debt in Q4 2019. Both states carried more than $3,400 in credit card debt per capita in 2019, but only decreased their balances by 10% year-over-year in 2020.

While state-level data won’t be available until next year, the national trend suggests that credit card debt per capita will likely increase in some states by the end of 2021. As the COVID-19 vaccines became more widespread, many people quickly went back to their pre-pandemic spending habits this summer. In some cases, they practiced “revenge spending” to justify every splurge as a means to avenge what they lost in the last year. Only time will tell if and where this paydown trend will continue.