Report: Credit Card Use Dips in Q1 Amid COVID-19 Uncertainty

As the coronavirus outbreak spread in the U.S. in the first quarter, credit card purchase volume and debt outstanding declined, according to ABA’s latest Credit Card Market Monitor released today. Monthly purchase volumes fell across all risk tiers compared to the previous quarter, particularly in the super-prime and prime categories, each of which fell by 2.3%. Subprime monthly purchase volume declined by 1.5%.

Amid concern about the pandemic and economic uncertainty, the share of account holders who paid off their balance in full each month declined by 30 basis points to 31.6%, while the share of account holders carrying a monthly balance rose by 50 basis points to 44.6%. Outstanding credit as a share of disposable income fell 11 basis points in the first quarter to 5.39%.

“Consumers faced exceedingly challenging times amid an abrupt deterioration of economic conditions,” said ABA Senior Economist Rob Strand. “It is not surprising that consumers reduced their credit card spending compared to the previous quarter as they navigated substantial financial uncertainty stemming from the pandemic.”

The total number of new accounts (opened in the previous 24 months) fell in the first quarter, driven by a 1.6% drop in super-prime accounts and a 1% drop in prime accounts. New subprime accounts fell by 0.3% year-on-year. Average credit lines were little changed for all accounts except the subprime risk tier, where they grew by 0.4% to $3,955.