During one of the worst economic downturns in U.S. history, almost 80 percent of credit cardholders responding to a survey said they’re worried they won’t be able to make the minimum payment on their debt.
Millennial cardholders are most at risk — 91 percent of respondents say they are worried about missing payments, according to a survey conducted in mid-July by CreditCards.com.
One in four survey respondents said the pandemic has caused them to take on more credit card debt.
Therefore it seems counter-intuitive that, despite the recession and high unemployment, people in the U.S. have been paying off their credit cards.
Household debt fell in the second quarter of 2020. Consumers, stuck at home with reduced options for safely going out and spending money, spent less on their credit cards, according to a new report from the Federal Reserve Bank of New York.
Credit card balances fell by $76 billion between April and June, the steepest decline on record.
The experts expected the opposite — that massive unemployment would lead to a spike in living off plastic.
The Fed’s findings, released Thursday, suggest that government stimulus and bill deferrals helped to keep many families from falling far behind financially during the early months of the pandemic, New York Times reported.
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“So far, I have been pleasantly surprised how few people have fallen behind on their payments during the pandemic,” said CreditCards.com industry analyst Ted Rossman.
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However, most of the coronavirus relief money has been used up. The pandemic shows no sign of just disappearing and unemployment is still higher than 10 percent.
More than 60 percent of the survey respondents said they may not be able to make their minimum payments if they can’t return to work, CNBC reported.
The average U.S. household has around $5,700 in credit card debt, with a minimum payment of around $133, according to Rossman. The lack of delinquencies to date may be artificially delayed, but not avoided, by stimulus money. Now that the stimulus has stopped, a surge of delinquencies is anticipated.