More Americans are facing severe debt during the pandemic, according to a recent report from the consulting firm Inside 1031.
The report, released Sep. 13, included the results from a recent survey of 1,000 Americans who own one or more credit cards. Though experts said this debt is critical for keeping businesses and people afloat around the world, recovery could be complicated as payments come due.
Forty five percent had taken on more credit card debt. Also, individuals who carried a credit card balance month-to-month were found to be more than twice as likely to have more debt than they did before the pandemic. This trend is considered a reversal from the earliest days of Covid-19, when lockdowns sharply reduced consumer spending.
As the Covid-19 delta variant results in the return of mask mandates and restrictions, the survey found that credit cards continued to be an important part of U.S. spending, with 16 percent of people owning five or more credit cards. Nearly three-quarters of respondents predicted that the United States would eventually become a cashless society.
The survey included 20 questions intended to reveal the current state of Americans’ finances. Takeaways included:
- Since March 2020, 44 percent of Americans have assumed more credit card debt, and a little more than one-quarter have less.
- Fifty five percent carry a month-to-month credit card balance
- Nearly one in five Americans have more than $20,000 in credit card debt.
- More than six in 10 worry that potential lockdowns will adversely impact their financial situation. Those who carry a monthly balance are 26 percent more likely to hold those feelings.
- Nearly one-third said they did not know the interest rates of their credit cards
- Forty five percent would not pursue a relationship with someone who has significant credit card debt
- Thirty-seven percent have less than $1,000 in emergency savings, and 13 percent have no emergency savings.
- Forty percent have not been credit card debt-free since before 2018, and 15 percent reported carrying a monthly balance since before 2006.
- Twelve percent had more than $25,000 in credit card debt more than doubling the 5 percent who said the same two years ago.
- Those who carried monthly credit card balances most frequently cited school expenses as the reason, followed by wedding costs, financial support for a family member, veterinary expenses, moving and medical emergencies.