Credit-Card Spending by Americans Declines for the First Time Since the Pandemic
Following the 2020 onset of the COVID-19 pandemic, digital payments for both everyday essentials as well as discretionary purchases fueled a surge in the use of debt- and credit-card spending. During the “pandemic-era” period, credit-card spending “pushed the card balances of Americans above $1 trillion. Initially when the economy contracted debit-card spending surged, people also using debit-cards to collect and spend government stimulus checks. In contrast, credit-card spending “initially shrank when the economy contracted,” but in 2022 “surged, as activities such as travel roared back, bolstering discretionary spending” and pushing the pace of growth to “more than seven times as fast as debit-card spending.” The recent period of high inflation also sparked a surge in credit-card originations, allowing “Americans to keep spending on discretionary items even after money ran out from pandemic stimulus payments,” according to the recent article by the Wall Street Journal. Reported spending data from Visa and Mastercard indicate that since late 2024, the pace of growth in credit-card spending has slowed as consumers grow more cautious about taking on new debt due to recent added pressures on household budgets ranging from the resumption of student loan payments to high credit-card interest rates. Although both credit- and debit-card spending continues to rise, for the “first six months of this year, U.S. debit-card spending — which typically accounts for a little more than half of all card payments — rose 6.57% from a year earlier,” while credit-card spending, by comparison, “rose 5.65%, the Visa and Mastercard data show,” ending a “streak of 14 consecutive quarters in which the opposite was true.”
A further indication that there is an increasing number of Americans looking more closely at their finances is a “recent surge in personal loans typically used to consolidate credit-card debt.” In the first quarter of 2025, the volume of personal-loan originations rose 18% compared to the same period last year, “bringing total balances to a record $257 billion.” The popularity of these types of loans has become more attractive as rising interest rates making revolving debt harder to manage, with recent data from the Federal Reserve Bank of Philadelphia reportedly revealing that “the share of Americans only making the minimum payments on credit cards is near a record [number].” However, the relief from the consolidation of credit-card debt into personal loans can be temporary, since according to reported findings of a separate study completed in 2023 by credit reporting firm TransUnion, “while borrowers who consolidate credit debt into personal loans initially reduce their card balances by an average of 57%, many refill those cards within 18 months.”