Credit Card Debt During the Pandemic is Leading More People into Financial Stress
47% of Americans carry credit card debt, as per a survey and 23% of card holders have added to credit balances due to the Covid-19 pandemic. Millennial credit card owners have been affected the hardest, with 34% being pushed further into debt, due to lack of savings, unemployment, and two recessions.
About 40% of Americans are unable to pay more than the minimum, and they should seek relief directly from credit card agencies. Nearly 120 million people in the USA have enhanced credit card debt from 43% reported in early March. The sharp increase in credit card debt is brought on by stay-at-home orders being issued by the state, that closed millions of businesses. As much as 23% of new credit card debtors have been added as a result of the pandemic.
Savings badly hit
Millennials suffer financial hardship more than the previous generations due to sudden spike in unemployment forcing 30 million people to apply for unemployment benefits, adding to woes of millions of young Americans already just managing to get by, and forcing many to use credit cards for basic necessities. Unlike previous recessions in 2008 and the Dot Com crash, sudden unemployment forced youngsters to rely on credit cards. Surveys reveal that only 39% of millennials (ages 23 to 38) confirm having enough funds to support themselves for three months if sudden problems occur. Further, 36% of respondents admit not having funds set aside for unexpected expenses. Average hourly wages adjusted for inflation, have barely budged in 50 years, but some major expenses such as housing and college have grown exponentially. Wage growths are stagnant amid rising costs of living, and hamper their ability to save. Millennials now earn 20% lesser than boomers used to when they were the same age, according to one report. Older millennials in their mid-30’s have lived through 2 recessions now since they joined the job market. Between this current and the historical Recession, millennials have a hard time accumulating assets, more so than Gen Xers and the boomers.
Coronavirus crisis causes financial stress for 90% Americans
Experts feel that the most common strategy for repaying debt is by paying more than the minimum (60%), balance transfers (13%) and paying the bare minimum (13%). About 9% are not paying anything at all and another 4% don’t have a plan. Given the extent of joblessness, new solutions need to be explored. Earlier, the strategy was to get a transferable balance or personal loan. But credit card companies stopped offering interest-free balance transfers and banks have curtailed personal loans because of risk. Banks offer some help with card payments and customers need to talk to credit card companies. Request for a break, or skip a payment as every bank is offering some assistance. Experts warn against using stimulus or unemployment checks to pay for debt as people need cash on hand for emergencies. Instead, request for lines of credit from your credit card. Under CARES Act provisions, eligible taxpayers receive $1,200 for individuals and $2,400 for couples, while parents receive up to $500 for each qualifying child. Some states have reopened and the economy will improve gradually. Take inventory of your debt and design a game plan for reducing that debt. As the economy picks up restrictions will ease, and balance transfers or personal loans will be available online.
More in Investments & Savings
-
`
Do the Rich and Famous Celebs Have Secret Life Hacks? You Bet They Do!
You may apply lessons from your own life by studying the behaviours of those who have gained success and renown. Fame...
August 20, 2023 -
`
Debt Investments – What Are They?
Debt has always been a notion, and if someone owes a debt, they must also be the owner of that debt....
August 5, 2023 -
`
Inflation forces 38% of American Adults To Delay Major Purchases
Many American adults are delaying major milestones such as buying a house or buying a car due to inflation. 51% of...
July 28, 2023 -
`
What are the Rich Spending their Money on the Most? THIS!
Money waste is a rather personal matter. Personal finances are very private, and you are in charge of deciding how you...
July 16, 2023 -
`
Hobbies That Keep the World’s Top Billionaires Busy
Like their sources of money, famous billionaires’ hobbies tend to be unconventional. These business leaders, entrepreneurs, industrialists, and creators of IT...
July 4, 2023 -
`
How to Choose Between Online Banks Offering High Interest Savings Rates
Savings account interest rates are on the rise, but the national average savings rate is only 0.08%, mainly for large, national...
June 25, 2023 -
`
Inflation is Evidently Affecting Your House Buying Ability
The globe is affected by inflation, but the United States has been most afflicted, with an annual inflation rate of 8.5%...
June 18, 2023 -
`
Could You Manage to Recession-proof Your Savings? Start Now!
Recession impacts your yavings and without a job, your savings could pay your bills. Even with a job, your investment value...
June 1, 2023 -
`
So You’re a Journalist Trying to Crowdfund? We Got You!
Crowdfunding involves convincing many people to contribute small sums of money for specific projects, via the Internet, using reliable payment portals....
May 30, 2023
You must be logged in to post a comment Login