One-third of Americans May Fall Behind on Credit Card Bills, Thanks to Coronavirus
Mar 28th, 2020 @ 9:00 PM by Amber Nelson
With millions of Americans ordered to stay at home during the coronavirus outbreak, many have lost jobs or seen their hours drastically reduced. The result could be that credit card debt could rise even faster, according to a new survey by WalletHub.
The survey found that roughly 67 million, or almost a third of adult Americans will have trouble paying off their credit card bills because of financial fallout from COVID-19.
That’s especially alarming given that total U.S. credit card debt was already at a post-Great Recession high of $1 trillion, with the American households carrying and average of $7,000 in debt. Credit card interest rates have been near record highs of about 17%, which translates into payments of about $1,100 each year just in interest charges.
Now that many are out of work or on reduced salaries, it could be even harder to pay off credit card debt in full each month. “Their struggles could easily ripple through the economy if left unaddressed, especially considering the more than $1 trillion in credit card debt currently owed by U.S. consumers,” said Odysseas Papadimitriou, CEO of WalletHub.
A separate study from LendEDU found that almost 70% of those who had a coronavirus-related job loss are taking out more credit card debt now than they expected. And 60% of those who have had their employment hours cut are charging more to credit cards.
The move to more credit may not be entirely due to lack of funds. Even among those who have had no job changes, 37% are using more credit. That could be related to the WalletHub survey finding that six in 10 Americans believe that coronavirus can be contracted by touching paper money. And then again, so many consumers are staying home now, credit cards may be their most available option now that most shopping is done online.
One bright spot for personal finance from the WalletHub survey was that 158 million Americans say they are saving more than spending now because of the coronavirus.
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.