Question of the Day: What was the impact of coronavirus on credit card balances in April-June quarter this year? a) Increase in balances b) Decrease in balances c) No change
Answer: Decrease in balances
- What do you think were the causes of this decline in credit card balances?
- What are the benefits of paying down your credit card balances?
- Where do you think the credit card bill ranks when it comes to paying down other recurring monthly bills (rent/mortgage, car payment, utilities, smartphone) when money is tight?
Behind the numbers (NY Fed):
Credit card balances typically see declines in the first quarter, following a bump in the fourth quarter due to holiday spending (although note that our data show total outstanding balances, including those that will be paid off after the statement and those carried over from the previous month). But declines in credit card balances in the second quarter of any year have, thus far, only been seen during the Great Recession, and the magnitude of the $82 billion decline in the second quarter of this year is unprecedented since at least 2000.
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About the Author
Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.
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