Some Americans Drowning in Credit Card Debt Following the COVID-19 Pandemic: Survey
The COVID-19 pandemic has wreaked havoc on the global economy, and the United States is no exception. Millions of Americans lost their jobs or had their hours reduced, forcing them to rely on credit cards to make ends meet. According to a recent survey, this has resulted in a significant increase in credit card debt among Americans.
The Survey Results
The survey, conducted by WalletHub, found that Americans added $35.6 billion in credit card debt in the second quarter of 2020, bringing the total credit card debt to $807 billion. This marks a significant increase from the $19 billion added in the same quarter of 2019.
Furthermore, the survey found that the average household credit card debt increased by $714 in the second quarter of 2020, bringing the total average debt per household to $7,027. This is the highest level of credit card debt since 2018.
The Impact of the Pandemic
The COVID-19 pandemic has caused unprecedented financial hardship for many Americans. The sudden loss of income has forced many people to rely on credit cards to pay for essential expenses like groceries, rent, and utilities. This has resulted in a surge in credit card debt, with many people struggling to make even minimum payments.
The pandemic has also led to a decrease in credit card usage, as many people have cut back on unnecessary spending. However, this has not been enough to offset the increase in debt, as people continue to struggle to pay their bills.
The Importance of Credit Scores
One of the biggest concerns for people drowning in credit card debt is the impact on their credit score. Late payments and high levels of debt can have a significant negative impact on credit scores, making it difficult for people to access credit in the future.
This can have a ripple effect on people’s finances, limiting their ability to buy a home, get a car loan, or even open a credit card with a lower interest rate. It’s important for people to take steps to improve their credit score, such as making on-time payments and reducing their debt load.
Options for Managing Credit Card Debt
For people struggling with credit card debt, there are several options available for managing their debt. One option is to contact their credit card issuer and ask for a payment plan or a lower interest rate. Some credit card issuers may be willing to work with people who are struggling to make payments.
Another option is to consider debt consolidation, which involves taking out a loan to pay off multiple debts. This can make it easier to manage debt because people will only have to make one payment per month, rather than multiple payments to different creditors.
Finally, people may want to consider credit counseling or debt settlement. These services can help people negotiate with creditors to reduce their debt and create a manageable payment plan.
Tips for Avoiding Credit Card Debt
While it’s important to know how to manage credit card debt, it’s even more important to avoid getting into debt in the first place. Here are some tips for avoiding credit card debt:
– Create a budget and stick to it.
– Only use credit cards for essential expenses.
– Pay off credit card balances in full each month.
– Avoid opening new credit cards unless necessary.
– Monitor credit card usage regularly.
Conclusion
The COVID-19 pandemic has caused unprecedented financial hardship for many Americans, leading to a surge in credit card debt. This debt can have a significant negative impact on people’s credit scores and financial futures. It’s important for people to take steps to manage their debt and improve their credit scores, as well as avoid getting into debt in the first place. With careful planning and budgeting, people can improve their financial situations and avoid drowning in credit card debt.