(Photo : Credit Card Debt Drops as Consumers Fret About Financial Future)

After reaching an all-time high in February 2020, consumer credit card debt was down by the end of last year. Most experts anticipate this trend to continue into 2021.

While financial anxiety spawned by the coronavirus pandemic is the primary driver of consumer hesitance to use credit cards, it's not the only cause. Another reason is the utter lack of things to spend money on due to COVID-19; no vacations, no restaurants, no movie theaters, no sporting events, et cetera.

Let's look at the numbers: total credit card debt is down $700 million from pre-pandemic projections. Furthermore, credit card balances on an annualized basis saw a whopping 6.7% dip in October 2020. The end-of-year differential would only end up being 1%, but it's a significant shift from what economists anticipated.

It's worth noting, however, that total consumer debt continues to climb. Between car loans, student loans, and no credit check loans used to put food on the table, consumers remain reliant on borrowing even if they're concerned about debt.

In most cases, the difference is that borrowed money comes with lower interest compared to credit cards, with the average interest rate on credit cards sitting somewhere between 14.65 and 16.28%. With this in mind, the overall growth of consumer debt minus credit card debt equals "better" debt on average. This is especially true when there's collateral involved.

Reluctance to spend with credit cards and reduced opportunities to spend in general still don't tell the whole story regarding the drop in credit card debt. Another factor is the number of people who used 2020 as an opportunity to pay off outstanding credit card balances. There's also the fact that many people could use stimulus money and extended unemployment payments to cover bills and expenses they'd otherwise have to use credit to afford.

Another factor is the reduced number of people applying for new credit cards, with rates down almost 11%. Fewer folks are applying for credit increases as well. All the while, applications for new cards and credit increases see a higher rate of rejection than in years past.

Loss of income and outright unemployment are undoubtedly involved in the reduced number of people using credit cards in recent months. For some, the thought of another monthly payment is one too many. For others, their credit limit has been maxed out due to using credit to cover living expenses. In either case, using credit going forward is off the table.

Despite all the bad news affecting consumer spending, many people surveyed expect their access to credit to improve in 2021. Optimism about the bounce-back from the pandemic is driving these notions, especially as vaccinations occur en masse across the country.

However, the job market outlook doesn't match up well with that level of optimism; most experts think the vast majority of jobs lost due to COVID-19 will not be coming back. It's safe to say that if unemployment rates remain where they are for the majority of 2021, consumer access to credit and consumer credit usage will continue to see a dip.