The ongoing COVID-19 pandemic has resulted in many changes to how consumers spend their money and use their credit cards. Once the pandemic hit in early 2020, the lengthiest economic expansion in the history of the country officially ended. For a lengthy period of time, businesses from a wide range of industries were tasked with shutting down or significantly reducing their operations. Because of unemployment and numerous additional factors, Americans needed to reassess how to pay for expenses and what their overall household spending would be.

How Incomes Changed During the Pandemic

The impact that the pandemic had on household incomes varied significantly. According to an Associated Press poll that was taken in February 2021, around 53% of all American households responded that they lost income since March 2020. The reasons that these households lost income in that time period include:

• Being laid-off entirely
• Being unable to work for as many hours
• Having annual salary or wages reduced
• Quitting a job

Nearly one-quarter of these poll respondents stated that they were unable to meet their financial obligations, which included paying bills. Despite the lost income that many Americans faced as a result of the pandemic, more than two-thirds of all poll respondents stated that they had the ability to save more money, pay down debt, or lessen spending to make up for the lost income.

It’s important to understand that the pandemic affected workers differently depending on the types of jobs they had. For instance, lower-wage workers in the service industry and similar industries found that their hours were cut or that they lost their jobs altogether. On the other hand, many employees who worked in a traditional office setting weren’t heavily impacted by the pandemic since they were able to shift to working from home.

How Credit Card Spending Changed

Once the pandemic hit, there were some changes to how consumers used their credit cards. First of all, eCommerce websites and platforms saw a sharp increase in consumer spending since the pandemic caused many consumers to start shopping online even more than they had in the past.

According to the U.S. Department of Commerce, the eCommerce estimate for the fourth quarter of 2020 displayed a 32% increase in consumer spending since the same quarter in 2019. Annual eCommerce sales also increased by 32%. Since cash can’t be used when paying for goods or services online, consumers are required to choose another method to make their payments. However, statistics show that consumers are becoming more cautious about using their credit cards for eCommerce purchases.

According to an Industry Insights report by TransUnion, credit card balances dropped for the fifth straight quarter by the end of 2020. The exact rate was 9.6% for the fourth quarter of 2020. This statistic indicates that consumers are deciding to spend less on their credit cards despite needing other forms of payment when making online transactions.

How People Have Been Handling Credit Card Debt

The manner in which Americans have paid down their debt has also changed because of the pandemic. For instance, consumers throughout the U.S. have focused more on paying mortgage loan debt as opposed to prioritizing auto loan or credit card debt. This renewed focus on mortgage loan debt has been caused by a combination of mortgage payers using loan modification programs to avoid foreclosure as well as a higher number of employees working from home. Keep in mind that the average credit card debt per borrower was right around $5.111 in the fourth quarter of 2020, which was a drop from $5,835 the year before.

A YouGov poll requested by Forbes Advisor in March 2021 found that around 50% of respondents showed very little concern or no concern for their credit card debt. For the people who already had credit card debt, around 40% had more debt or the same amount of debt when compared to the beginning of the pandemic.

The people who carry at least some credit card debt were largely confident that they could pay off the debt. In the same poll, 45% of respondents stated that they could pay off all of their credit card debt in a period of 3-12 months. It’s believed that this confidence was caused by the stimulus payments that most Americans qualified for in 2020 and the beginning of 2021.

Nearly 20% of all respondents used at least some of their stimulus payments to pay off their remaining credit card debt. Another 25% of respondents used their stimulus payments to cover other debts that they owed.

Despite the economic difficulties that many American households have faced because of the pandemic, consumer behavior with credit cards has changed very little. Since most consumers were spending less, the same consumers didn’t place as much debt on their credit cards as they typically would have.