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Susan Tompor: Credit card balances drop, giving room for holidays. Here are ways to pay

By Susan Tompor, Detroit Free Press on

Published in Home and Consumer News

Many of us won't be putting airline tickets on our credit card or using plastic to pick up the tab for a big holiday dinner at a fancy restaurant with the extended family. We're just not looking at that kind of holiday spending in 2020.

But consumers, being consumers, are bound to pile on a little debt, as well as a few pounds, from Thanksgiving through the end of December.

And the odd nature of 2020 means that many consumers have more wiggle room to use their credit cards to go shopping. The question is: How much will they use credit?

Credit card balances are way down from a year ago, thanks to limits on our lifestyles due to the COVID-19 pandemic.

Average credit card balances for consumers dropped about 10.5% to $5,075 in July through September, according to the latest data from TransUnion. That's down from $5,558 in the third quarter in 2019.

"A 10% drop year over year is nearly unprecedented," said Paul Siegfried, senior vice president and credit card business leader at TransUnion.

 

Consumers on average are carrying smaller balances on their credit cards going into the prime holiday shopping season than a year ago, according to TransUnion.

Two factors are at play.

One, consumers did have far more cash to spend — and pay down some debt — earlier this year once they began receiving the healthy stimulus checks that were rolled out to cushion the fallout as businesses locked down and regrouped to battle the virus.

Second, many people stopped splurging once the pandemic — and job losses — hit.

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