The BEST CREDIT CARDS of 2021

Credit card companies pumped up their rewards to keep consumers spending during the pandemic. Newsweek’s first card ranking will help you pick your best offer

THE PANDEMIC HAS DRAMATICALLY RESHAPED AMERICANS’ relationship with credit cards—surprisingly, for the better. Instead of the increased delinquencies, ballooning balances and falling credit scores that might have been expected as the economy struggled and unemployment spiked, the opposite has happened: Balances are down, credit scores are up and credit card issuers are rolling out a red carpet of enhanced rewards to keep consumers spending.

According to the Consumer Financial Protection Bureau, balances dropped an average of 10 percent from March to June of last year, and the trend continued through 2020, proving true even for people who had been struggling financially before the pandemic. New delinquencies on loans and credit card accounts also fell, after being flat or increasing gradually in 2019.

Experts attribute the improvement to a combination of stimulus payments, expanded unemployment insurance benefits and reduced spending on activities like dining out, entertainment and travel, which left many people with extra cash to pay down debt. That in turn pushed credit scores higher: The average score hit 711 in 2020, Experian reports—up eight points from 2019.

“A significant group now find themselves in a much better position than they were a year ago,” says Matt Schulz, chief credit analyst at LendingTree. “A lot of Americans need credit cards less than they have for quite some time.”