More Americans Carry Credit Card Debt Due to COVID-19

Since early March, 10 million new Americans racked up credit card debt as a result of the COVID-19 pandemic, suggests recent research from CreditCards.com. ^[1]

Further Northwestern Mutual and Harris Poll data reports that average credit card debt was $5,400 as of mid-February. ^[2]

Roughly 36 million Americans have filed for unemployment over the past two months. Without a regular source of income, more than half of that debt is “paying for absolute necessities like rent, utilities and groceries.”

Christian Mitchell, a vice president of financial service company Northwestern Mutual, recently said in a press release people are trying to “adapt to their new normal.”

But the new “normal” is putting Americans into even more debt and worsening their mental health. And with millions of people still filing for unemployment, it’s not clear when or if these trends will improve.

Coronavirus credit card stress

Last month, the National Endowment for Financial Education released a survey that revealed 9 out of 10 Americans said the coronavirus pandemic caused them “financial stress.” ^[3]

Specifically, 23% said credit card bills were making them anxious behind having enough in emergency savings (41%), and job security (39%).

Debt.com has previously reported 67 million Americans worry they can’t afford their credit card bills due to coronavirus.

With so many Americans out of work due to the pandemic, 26% told WalletHub the “top stressor on their mind” was money problems – only two percentage points behind those stressed about the virus itself.

An in-depth report from Debt.com explored the correlation between debt and depression. Roughly 1 out 5 working Americans live with some form of mental illness – meanwhile, 71% have debt.

Government aid won’t cover credit card bills

Prior to stay-at-home mandates, a survey from GOBankingRates revealed 69% of the country had less than $1,000 set aside for an emergency. ^[4]

Last month, CNBC reported the average unemployment benefits check was only $378 a week. ^[5]

Between that and a $1,200 economic stimulus benefit, it’s difficult to pay for necessary expenses and cover that $5,400 credit card bill – especially since more than a third of Americans pay more than 15% interest on them.

How to treat your credit card debt symptoms

Back in March, 3 out of 4 Americans told WalletHub they think “credit card companies should forgive late payments.” Some are providing financial relief for their cardholders.

Debt.com compiled a list of bigger organizations in the report, “How 9 Major Credit Card Issuers are Responding to COVID-19.”Depending on your status with a card company or bank you may be eligible for forbearance and payment deferral. Others are also waiving fees.

 The best thing to do is to contact the company you have a card with to find out what your best options are.

A few months without fees or deferment may help, but many Americans were barely scraping by before the COVID-19 pandemic. If you need more than credit card issuers are offering, Debt.com can help you. Call.