The Impact of COVID-19 on Household Debt and Credit: Balances Surge to Record Highs, Delinquencies Rise, and Refinancing Helps Some

The COVID-19 pandemic has had a significant impact on the US economy, with many households relying on credit to manage their finances. According to the Federal Reserve Bank of New York’s Quarterly Report on Household Debt and Credit, total household debt surged to a record $17.05 trillion in the first quarter of 2023, an increase of $148 billion from the previous quarter.[0] This is nearly $3 trillion higher than the end of 2019, before the pandemic.

Credit card balances rose to $917 billion in the first quarter, an increase of almost 20% year-over-year, despite the average APR rising to 20.68%.[1] Unsecured personal loans also saw a rise in balances, increasing by 26.3% year-over-year to a new high of $225 billion, with subprime borrowers seeing the highest growth in balances at 40%.[2]

However, credit card balances remained flat during the first quarter of 2023, holding at $986 million, which is the first time in more than 20 years that there hasn’t been an outright decline in that category, according to the New York Fed researchers.[3] This may be due to consumers pulling back on spending and paying down some debt with the help of New Year’s Resolutions or tax refunds.

The “refinancing boom” helped households’ financial positions, with 14 million mortgages refinanced during the pandemic, allowing for $430 billion of home equity to be extracted through cash-out refinances.[3] According to researchers, roughly 64% of the actions taken involved homeowners refinancing to obtain a lower interest rate. This resulted in an average monthly payment reduction of $220.[3]

Despite the positive impact of refinancing, rising delinquencies are becoming a concern. More borrowers are falling behind on their personal loan and auto loan payments, and delinquency rates in those segments are now above pre-pandemic levels, according to TransUnion data. The share of folks falling behind on credit card and personal loan payments is also increasing, especially among the riskiest of borrowers.

Overall, it remains to be seen whether credit card and unsecured personal loan balances will continue to grow in the near-term, or if growth will slow as consumers moderate their pace of borrowing and lenders more closely scrutinize potential risk when determining to whom they lend moving forward.[4] As the Federal Reserve continues to raise interest rates, credit card issuers are likely to increase their APRs, which will further impact consumers with credit card debt.[5]

In summary, while the pandemic has had a significant impact on the US economy, households have been able to manage their finances with credit. However, rising delinquencies and interest rates suggest that consumers and lenders need to exercise caution moving forward.

0. “Household debt hit record $17T last quarter as inflation squeezes Americans” Fox Business, 15 May. 2023,

1. “TransUnion Report: Consumers Increasingly Turning To Credit, Unsecured Loans To Manage Household Budgets |” Crowdfund Insider, 12 May. 2023,

2. “U.S. credit-card debt jumps nearly 20% in the first quarter, TransUnion says” Morningstar, 11 May. 2023,

3. “Americans’ debt surpasses $17 trillion for the first time” KTVZ, 15 May. 2023,

4. “TransUnion: Mortgage Originations Near Record Low, Balances Hit Record High” National Mortgage Professional, 11 May. 2023,

5. “Average credit card interest rate for May 12: An all-time high” msnNOW, 12 May. 2023,