COVID-19 Leads US Consumers to Reduce Card Spending

Fed Reports Card Loans at $755 Billion (Approx. 838 Trillion KRW) as of Last Week of October

New Credit Card Issuances in Q3 This Year Down 50% Year-on-Year

[Image source=AP Yonhap News]

[Asia Economy Reporter Kwon Jaehee] Due to the reduced opportunities for consumption caused by the novel coronavirus disease (COVID-19), American consumers' card spending has been declining.

According to major foreign media citing the U.S. Federal Reserve Board (Fed) on the 15th (local time), the total card loans held by U.S. banks stood at $755 billion (approximately 838 trillion KRW) as of the last week of October. This is about $100 billion less than the amount during April, when the COVID-19 pandemic was at its peak. The Fed reported that card loan amounts have decreased over three weeks in the past month.

According to TransUnion, a company analyzing card spending data, U.S. consumers are cutting back on spending for dining out and movies, with travel accounting for the largest portion of card expenditures.

In particular, government subsidies and mortgage payment deferrals provided at the state government level due to COVID-19 have helped consumers repay their card loans, respondents indicated.

Matt Komos, Vice President of Research at TransUnion, stated, "Although card spending increased significantly around the recent holidays, consumers are still hesitant to use their cards."

The number of new credit card issuances in Q3 this year also dropped sharply. According to TransUnion, 8.6 million Americans applied for new cards in Q3 this year, which is about 50% less compared to the same period last year.

The decline in card loans has dealt a direct blow to the profitability of U.S. commercial banks. Citigroup, one of the banks most reliant on the card sector, saw its card revenue decrease by 18% year-on-year in Q3. Citigroup's card division accounts for one-quarter of its total revenue.

This content was produced with the assistance of AI translation services.