• December 7, 2022

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Per The Wall Street Journal (Oct. 29-30): “Credit-card debt recently reached a new milestone: It returned to where it was before the pandemic.” So, the Covid-19 effect is over when it comes to consumers using their credit cards? Nope – There’s still plenty of unused gas in tank.

The following graph shows what’s happened.

Prior to 2020, the quarterly credit card loans climbed at a steady 5+% year-over-year rate, as shown by the dotted blue line. During the Covid-19 closures, the loan balances fell about 15% before the seasonal pattern and growth started up again. Note that a return to the year-end 2019 level still leaves the loans far below the previous trend line.


Note: The September numbers used in the media reports are from Experian. The “official” numbers used in the graph are from the FDIC Quarterly Banking Profile report. The third quarter report will be released in December.

Two additional views add to the good news

First, the credit card loans are the unpaid balances. While the going-on $1 T amount may sound high, the total unused credit amounts are much greater. As of mid-year, the unused credit lines amounted to $4.3 T, meaning loans 17.5% of the total. (The average usage for the five years preceding Covid-19 was 18%).

Second, none of the numbers are adjusted for inflation. Doing so dramatically changes the WSJ article message and any analysis of growth rate. As shown in the graph below, the latest inflation-adjusted loan balance is comparable to the amount at the beginning of 2016 – over six years ago.

The bottom line

Two thoughts from the observations above:

First, loan balances show excessive consumer spending with credit debt increase.

Second, the many months of over-2% inflation mean any dollar analysis should use real (inflation-adjusted) amounts. Not doing so can create erroneous conclusions, as shown above.


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