Chattanoogans continued to pay off their credit card debt during the first quarter of 2021, building on a record-setting performance in 2020.
Th average Chattanooga household paid down their total credit card debt by $694 during the first three months of 2021 when a third round of federal stimulus checks were delivered to most families.
Despite the improvement in the financial status of most Chattanoogan, the typical household in metro Chattanooga still had $10,256 a credit card debt at the end of the first quarter, or 36% more than the U.S. average of $7,519, according to a study released Tuesday by the online financial website WalletHub.
Nationwide, Americans shed a total of $82.1 billion in debt during the first three months of this year. The reduction reversed a decade of increases that have added an average of $45.6 billion in credit card debt per year over the past decade.
"It's common for credit card debt to drop during the first three months of the year, but the drop we observed this year is the second largest ever, so we're definitely on a strong trajectory," said Jill Gonzalez, an analyst for WalletHub.
Gonzalez estimates that credit card debt will likely increase by around $60 billion during 2021, even after a $56.5 billion first-quarter rduction in debt.
"It's hard to imagine a scenario in which debt would not increase somewhat in the short term as the economy continues to reopen, extra unemployment benefits roll back, and consumers make up for lost time when it comes to spending," she said.
The credit card debt problem is far from solved despite the pay down in debt over the past year. Collectively, Americans still owe nearly $900 billion to credit card companies, including $778.9 million of such debt by Chattanoogans.
WalletHub advises those trying to reduce their credit card debt to both limit spending and boost monthly payments on the debt, if possible, and to focus first on the credit cards with the highest interest.
Contact Dave Flessner at firstname.lastname@example.org or at 423-757-6340