Press Release

Credit Card Balances See Second Largest Quarterly Decline in Series’ History, Driven by Paydowns Among Borrowers and Constrained Consumption Opportunities

Total household debt increased to $14.64 trillion in the first quarter of 2021
May 12, 2021

NEW YORK – The Federal Reserve Bank of New York's Center for Microeconomic Data today issued its Quarterly Report on Household Debt and Credit . The report shows that total household debt increased by $85 billion (0.6%) to $14.64 trillion in the first quarter of 2021. The total debt balance is now $344 billion higher than the year prior. While mortgage, auto loan, and student loan balances have continued to increase, credit card balances have substantially decreased. The Report is based on data from the New York Fed's Consumer Credit Panel, a nationally representative random sample of individual- and household-level debt and credit records drawn from anonymized Equifax credit data.

Mortgage balances—the largest component of household debt—rose by $117 billion in the first quarter of 2021 and stood at $10.16 trillion at the end of March. Credit card balances declined by $49 billion in the first quarter, a substantial drop and the second largest quarterly decline in card balances in the history of the data (since 1999). Credit card balances are $157 billion lower than they had been at the end of 2019, consistent with both paydowns among borrowers and constrained consumption opportunities.

Auto and student loan balances increased in the first quarter, by $8 billion and $29 billion, respectively. In total, non-housing balances (including credit card, auto loan, student loan, and other debts) decreased by $18 billion and are now $49 billion below the 2019Q4 level.

New extensions of credit were strong in 2021Q1 in both mortgages and auto loans. Mortgage originations, which include mortgage refinances, reached $1.1 trillion, only slightly below the record high seen in 2020Q4. Auto loan originations, which includes both loans and leases, edged down slightly but remain high at $153 billion. Only 15% of the $153 billion of newly originated auto loans were originated to borrowers with credit scores below 620, the lowest share seen in the history of the data.

"2021 began with a strong increase in new extensions of mortgage and auto loan credit coupled with a substantial drop in credit card balances," said Andrew Haughwout, senior vice president at the New York Fed. "However, surging retail sales volumes suggest that a combination of stimulus checks, increased consumer confidence, and pent-up demand are both supporting consumption and also helping borrowers reduce revolving debt balances."

Aggregate delinquency rates across all debt products have continued to decline since the beginning of the pandemic recession, reflecting an uptake in forbearances which were provided by the CARES Act or voluntarily offered by lenders. These supportive policy measures continue to be visible in the delinquency transition rates, as the share of mortgages that transitioned to delinquency remained low at 0.5%. As of late March, the share of outstanding debt that was in some stage of delinquency was 1.5 percentage points lower than the rate observed in the first quarter of 2020, just as the COVID-19 pandemic hit the United States. About 114,000 consumers had a bankruptcy notation added to their credit reports, a decline from the previous quarter and a new historical low.

The share of student loans that are delinquent remains very low as the majority of outstanding federal student loans remain covered by CARES Act forbearances. Auto loans and credit card delinquency transition rates also continued to decline, reflecting the impact of government stimulus programs and bank-offered forbearance options for troubled borrowers.

The New York Fed also issued an accompanying Liberty Street Economics blog post that examines the change in credit card balances by neighborhood income and age of the borrowers.

The Report includes a one-page summary of key takeaways and their supporting data points. Overarching trends from the Report's summary include:

Housing Debt

  • There was $1.14 trillion in newly originated mortgage debt in 2021Q1, with a record 73% of it originated to borrowers with credit scores over 760.
  • About 11,000 individuals had a new foreclosure notation added to their credit reports between January 1 and March 31, by far the lowest number of foreclosures we have seen since the beginning of the series in 1999.
  • The share of mortgage balances 90+ days past due fell to 0.59%, a historic low as forbearance remains an option and foreclosures are mostly on hold.

Student Loans

  • Outstanding student loan debt stood at $1.58 trillion in the first quarter, a $29 billion increase from 2020Q4.
  • About 6.2% of aggregate student debt was 90+ days delinquent or in default in 2021Q1. The lower level of student debt delinquency reflects a Department of Education decision to report current status on loans eligible for CARES Act forbearances.

Account Closings, Credit Inquiries and Collection Accounts

  • The number of credit inquiries within the past six months – an indicator of consumer credit demand – was at 116 million, a 3% decline from the previous quarter. Inquiries have been subdued since the second quarter of 2020 when the large effects of the pandemic hit the U.S.
  • Account openings declined by 2.4 million accounts and currently stands at 187 million, following a sequence of larger drops since the second quarter of 2020.

Household Debt and Credit Developments as of Q1 2021

Category Quarterly Change * (Billions $) Annual Change**
(Billions $)
Total As Of Q1 2021 (Trillions $)
Mortgage Debt (+) $117 (+) $447            $10.16
Home Equity Line Of Credit (-) $14        (-) $51 $0.34
Student Debt (+) $29 (+) $49 $1.58         
Auto Debt (+) $8 (+) $36 $1.38
Credit Card Debt (-) $49 (-) $123 $0.77
Other  (-) $6 (-) $14 $0.41
Total Debt (+) $85 (+) $344 $14.64

*Change from Q4 2020 to Q1 2021
** Change from Q1 2020 to Q1 2021

Flow into Serious Delinquency (90 days or more delinquent)

Category 1 Q1 2020 Q1 2021
Mortgage Debt 1.17% 0.42%
Home Equity Line Of Credit 0.77% 0.50%
Student Loan Debt 8.87% 1.02%
Auto Loan Debt 2.37% 1.72%
Credit Card Debt 5.31% 3.78%
Other 4.74% 3.25%
ALL 2.38% 0.86%

About the Report

The Federal Reserve Bank of New York's Household Debt and Credit Report provides unique data and insight into the credit conditions and activity of U.S. consumers. Based on data from the New York Fed's Consumer Credit Panel, a nationally representative sample drawn from anonymized Equifax credit data, the report provides a quarterly snapshot of household trends in borrowing and indebtedness, including data about mortgages, student loans, credit cards, auto loans and delinquencies. The report aims to help community groups, small businesses, state and local governments and the public to better understand, monitor and respond to trends in borrowing and indebtedness at the household level. Sections of the report are presented as interactive graphs on the New York Fed's Household Debt and Credit Report web page and the full report is available for download.

1 Rates represent annualized shares of balances transitioning into delinquency. Flow into serious delinquency is computed as the balances that have newly become at least 90 days late in the reference quarter divided by the balances that were current of less than 90 days past due in the previous quarter.
Mariah Measey
(347) 978-3071 
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