April 2022

Two Years Later: The Impact of COVID-19 On Credit Card Use

It’s been two years since the world was rocked by the emergence of a global pandemic, and almost no facet of our pre-pandemic existence, whether personal or professional, was spared by the disruption of COVID-19. Here at Deserve, we’ve been trying to understand how COVID-19 has altered and influenced credit card use, and what consumers’ changing relationships with credit means for the future of our industry. We’re learning about everything from the shifting attitudes of consumers toward their credit use and ability to pay off debt, to trends regarding spending behavior and the current status of consumer credit card balances.

Here’s what we’ve found.

Shifting attitudes toward debt

The pandemic forced many consumers to change their financial behavior. For some, the pandemic meant worrying less about credit card debt, and for others, it meant worrying more. For example, a TransUnion Global Payment Hierarchy Study recently revealed a trend among consumers to prioritize their mortgage loan payments over their credit card debt. This trend further matches up with a YouGov survey conducted for and reported by Forbes Advisor earlier this year, in which 50% of respondents expressed that they weren’t very concerned about their existing credit card debt.

However, according to a study by Bankrate from late last year, 47% of respondents who observed an increase in credit card debt expressed concern and attributed the increase directly to the COVID-19 pandemic—more on this later.

The bottom line is that the pandemic caused a notable shift in how consumers view and prioritize financial obligations, a shift that will likely continue to inform their spending habits in a post-pandemic economy.

Credit card balances are (mostly) down

Despite initial lockdowns forcing consumers to do most of their shopping online, multiple reports seem to confirm that average card balances are down, and that consumers have generally been more conservative with their credit cards throughout the pandemic. According to the Federal Reserve Bank of New York, card balances dropped by $49 billion in the first quarter of 2021, the second-largest drop in a single quarter that the institution had ever observed.

This significant dip in credit card balances will likely be short-lived. The Fed’s most recent report already details a slight rise in these numbers for the second and third quarters of this year, suggesting that credit card use patterns could be back to a pre-pandemic state soon.

However, we’d like to circle back to the Bankrate study. The study states that 42% of 1,297 respondents with credit card debt reported an increase in their balance since the start of the pandemic. In understanding the full spectrum of COVID-19’s influence on credit card balances and usage, this study highlights that credit cardholders are not a monolith—not everyone enjoyed a decline in their card balance over the last year and a half.

Despite progress, poverty is still a huge issue in the US

It is also important to note that credit card use is only one small piece of consumer activity and doesn’t necessarily speak to our country’s overall economic health. Many in the US continue to experience poverty, with nearly 20 million adults reporting not getting enough to eat this past year and nearly 12 million adults falling behind on rent payments, according to a study done by the Center on Budget and Policy Priorities. So while it is likely that many people simply spent less during the pandemic because they were staying at home, it is also possible that people spent less because they felt less confident in being able to pay high credit card balances.

Average credit scores reached a record high

Despite a variety of financial challenges brought on by COVID-19, the average FICO credit score has been steadily rising, and even reached a record high of 716 in 2021. And while this doesn’t necessarily indicate that pandemic-related economic hardship is over, it’s still a positive development that speaks to the success of financial support programs and the shift in spending and saving habits among consumers.

The reasons behind rising credit scores are numerous and dynamic. Between the issuance of stimulus payments, an economy that’s bouncing back, and the extension of novel payment accommodation programs offered by lenders, what we are seeing with credit scores seems to be the overall result of an effective campaign to make up for the widespread loss of income during the pandemic.

Most importantly, consumers have benefitted from financial support and the economic freedom that came with it, which may have helped credit scores. As FICO points out, consumers are missing fewer payments, reducing their debt, and getting better at spending within their means. This is excellent news, because if consumers continue this behavior, they can potentially access more opportunities than ever.


While it’s true that not all consumers have experienced a full-circle financial recovery from pandemic-related woes, it’s also true that many people improved their credit lives. For one thing, credit card debt and balances didn’t overwhelm consumers in a way that some had feared. Additionally, rather than buckling under pressure, there was a notable shift in consumer attitudes and behavior when using credit cards, and with some necessary assistance, many consumers have been able to raise their credit scores at an unprecedented rate.

Going forward, Deserve will continue to follow the pandemic’s impact on credit behavior. And as excited as we are to see COVID-19 fade into the past, we are just as excited to take what we’ve learned and use it to enact positive change, whether that means implementing further improvements into our own products and services, or doing whatever we can to directly empower businesses and consumers toward a path of financial security and success.

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