WASHINGTON, D.C. — U.S. Sen. Bernie Sanders said Monday that a new report released by the Government Accountability Office (GAO) found that financial aid provided by the federal government during the COVID-19 pandemic helped millions of working-class Americans reduce their credit card debt. It was the first time in nearly a decade that the share of active credit card accounts with a balance declined, Sanders said.
The report was commissioned by Sanders (I-Vt.), chairman of the Senate Health, Education, Labor, and Pensions (HELP) Committee, and Sen. Sheldon Whitehouse (D-R.I.), chairman of the Senate Budget Committee.
Pandemic assistance from the government — such as economic impact payments, expanded monthly child tax credits, expanded unemployment insurance, suspended student loan payments, and a moratorium on evictions — helped shorten the time credit cardholders carried balances and reduced the number of seriously delinquent accounts.
“This report demonstrates once again how critically important the American Rescue Plan was to the financial well-being of working families with children, the elderly, the sick, and the most vulnerable during the height of the pandemic,” said Sanders in a release. “Unfortunately, now that this financial assistance has expired, large financial institutions are filling the void by trapping working families into massive credit card debt and predatory loans that come with usurious interest rates and exorbitant fees. That is absolutely unacceptable. Not only do we need to extend the $300-a-month direct payment for working families with children that cut the child poverty rate by more than 40 percent during the pandemic, we also need to cap credit card interest rates and sky-high fees. In other words, we need an economy that works for all of us, not just Wall Street CEOs and the top 1 percent.”
The GAO found that revolving balances declined from about $1,737 in April 2020 to $1,529 in December 2021 — about 12 percent. Still, the report confirmed credit card debt looms large in the lives of most Americans: 532 million consumer credits cards represented a total outstanding debt of $856 billion as of 2021. From 2018-2020, Americans paid $120 billion in credit card interest and fees on average each year, which is about $1,000 per household in America. According to a separate report from the Federal Reserve, the average credit card interest rate in the U.S. was 22.77 percent, which is more than four times the average rate for an auto loan.
In June, Sens. Whitehouse, Sanders, and colleagues re-introduced their Empowering States’ Rights to Protect Consumers Act, legislation to restore states’ ability to limit consumer loan interest rates for their residents and help address the record credit card debt held by Americans.