$ 83 billion in credit card debt paid off in 2020

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Revolving credit card debt among average households fell to $ 8,089 by the end of 2020, CNBC reported. January study by NerdWallet placed the total credit card debt owed by average U.S. households at $ 7,027, down 6.34% from 2019.

WalletHub Consumers will add an additional $ 50 billion in credit card debt this year, which is the average of $ 54.2 billion in credit card debt per year over the past 10 years, according to Nerdwallet.

Interest rates make credit cards one of the most prohibitive ways to borrow money.

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Credit card companies now charge an average of 15.99% interest on overdue balances, which is down from a record average of 17.85%, CNBC reported.

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An increase in retail consumer spending could be on the horizon as more Americans are vaccinated against COVID-19 and social distancing restrictions are relaxed, economic experts have said. However, this would also likely offset recent gains in consumer debt.

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The $ 1.9 trillion stimulus package, which is expected to land on President Joe Biden’s desk later this week, would also provide additional economic relief.

“A short-term spending explosion is inevitable,” Gonzalez said, according to CNBC. “The question is, in which direction the pendulum swings in 2022 and beyond. … I hope consumers internalize the lessons learned during the pandemic and show a new frugality. “

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While the drop in credit card debt is a positive sign, many families still struggle financially amid the pandemic.

While 14% of Americans said their economic situation had improved during the pandemic, 42% said they were in fact worse off, according to the NerdWallet survey.