Outstanding household debt dipped by 0.2% in the second quarter of 2020, falling by $34 billion to land at $14.27 trillion, the Federal Reserve Bank of New York reported today. It was the first decrease since 2014 and the largest decline since 2013, driven primarily by a $76 billion decline in credit card debt as consumers cut spending amid the economic uncertainty of the coronavirus pandemic.
Other debt balances to see declines were home equity lines of credit (which fell $11 billion to $380 billion) and auto loans (which dropped by $3 billion to $1.34 trillion). Student loan balances rose by $2 billion to $1.54 trillion. Mortgage balances, the largest component of household debt, rose by $63 billion to $9.78 trillion.
Overall delinquency rates dropped sharply in the second quarter as many consumers took up forbearance options provided in the CARES Act, with 3.6% of all outstanding debt in some stage of delinquency, down a full point from the end of 2019. Loans with balances 90 days or more delinquent declined across all categories except HELOCs, falling from 1.17% to 1.08% for mortgages, from 8.87% to 6.48% for student loans and from 5.31% to 5.05% for credit cards.