Americans add around $50 billion in credit card debt each year. 2020 was very different as the pandemic forced many people to stay indoors and gave them a chance to evaluate their spending.
“The pandemic actually looked to save a lot of people from getting into debt,” said Jill Gonzalez, an analyst at WalletHub. “Because of that, we saw the biggest debt pay down that we’ve seen in 35 years.”
The study from WalletHub found that Americans paid down almost $83 billion in credit card debt. It’s a welcomed change of pace for experts who worried about the ever-increasing amount of credit card debt. However, San Diego was not high on the list of cities that paid off the most debt.
“San Diego, like most bigger cities, did not do well when it comes to credit card debt, unfortunately,” said Gonzalez.
The study found that the average person in San Diego has over $15,000 in credit card debt. In North County, Oceanside ranked even lower. It had the same amount of average debt, but a higher increase during the pandemic. At the same time, Chula Vista ranked in the top 50 best cities for debt paydowns.
“A lot of people were able to save and a lot of people were actually able to pay off debt,” said Gonzalez. “Unfortunately, we don’t think that is going to last. I don’t think we’re going to see that by the end of 2021.”
WalletHub’s survey found one-in-ten Americans say they expect to go on a major shopping spree once the economy re-opens. Gonzalez says this is perfectly in line with what they saw during the 2009 recession.
“They paid off debt in 2009,” said Gonzalez. “[But] kind of right after the great recession and 2010, basically up till 2020, we saw Americans increasingly tack on debt.”
Many of the respondents in the WalletHub survey said the pandemic helped them save because they were shopping less and staying home. While some people paid off credit card debt, other people focused on student loans. Gonzalez says there are some simple ways you can keep the moment from last year going.
“Look at your smallest balance and put any extra money you have toward paying that off,” said Gonzalez. “Then pay the minimum on everything else so you can at least clear something.”
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