Page 25 - BusinessWest October 27, 2021

Gathering Storm
End of Debt Moratoriums Could Be a Shock to Many
During times of recession or economic upheaval, the last thing economists expect is for credit-card debt to fall.
Yet, that’s exactly what happened during the
first year of the pandemic. According to Experi- an, from the third quarter of 2019 to the third quarter of 2020, credit-card balances fell by 24% nationally. The percentage of credit-card users
Viale, CEO of Cambridge Credit Counseling in Agawam.
But that has not been the case in 2021.
“When things started opening up a little bit, people went haywire; they started spending like crazy,” Viale noted. “Credit-card debt has increased by 13% over the last quarter, which is the most it’s ever increased in a quarter.”
“
have been in a good position, but then, when all these debts start to come due again, it’s going to be a very difficult time.”
Basically, stimulus worked — in the sense of stimulating spending. “You got free money, the $250 tax credit per child, you got whatever other government programs were there ... people had a lot of money in their hands. Even though they weren’t working, the unemployment checks they were getting were as good as if they were work-
carrying an interest- bleeding balance month to month fell from 58% to 53%, according to the American Bankers Assoc.
One reason was that this was no normal eco- nomic downturn; dur- ing the early months of COVID-19, businesses were shuttered, res- taurants were closed, and consumers simply reduced their spending dramatically — even if they were still working, and despite the govern- ment stimulus checks.
“For the first year of the pandemic, people weren’t really spending;
they were paying down debt. Record amounts of debt were being paid down,” said Christopher
For the most part, consumers
Christopher Viale says student-loan deferments, set to end in February, may pose issues for families who haven’t paid them back in a while.
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