42% of US Adults Increased Credit Card Debt Since COVID-19 Started
Bankrate.com conducted a survey on the topic of increased credit card debt in early September. Almost half of the people who had debt before the pandemic saw it rise since March 2020.
The research involved 2,400 adults. More than half of them, 1297, had credit card debt. 47% of adults who said that their debt has increased since the pandemic started linked the cause of increase directly to the pandemic.
These findings are in sharp contrast with the latest Federal Reserve data. The Federal Reserve says that credit card debt has lowered significantly overall. It leads to the conclusion is that these financial improvements aren’t universal.
“It does go to show how widespread and persistent of a problem credit card debt can be,” senior industry analyst at Bankrate.com, Ted Rossman, said. He added that Bankrate’s survey clearly shows that the financial improvements “have not been shared by households equally.”
With the average annual percentage rate being about 16%, it is not surprising that credit card debt is not something people can get out of easily. Another worrying statistic from the survey is that the average person with credit card debt owes $5,525.
The survey also pointed out that 54% of adults carry their balances from month to month. Half of those people have been in debt for at least a year.
Rossman said, “It does tend to be a long-term systemic kind of thing,” and explained some of the steps people with debt could take to get rid of it. He mentioned that borrowers could consolidate their debt with a personal loan. Another option could be to reduce their spending and budget wisely to include higher debt payments. He also estimates that with the economic recovery, many banks will start offering excellent 0% balance transfer deals again - something that had dried up during the pandemic.
The Bankrate survey also asked when the participants expect to be free of debt. Most of them had a positive outlook: 30% expect to get out of debt within a year, and 60% estimate that it will take them five years. One in 10 participants was unsure about the timeframe, and only 5% worried that they wouldn’t be able to get out of debt at all during their lifetimes.
Albert Einstein is said to have identified compound interest as mankind’s greatest invention. That story’s probably apocryphal, but it conveys a deep truth about the power of fiscal policy to change the world along with our daily lives. Civilization became possible only when Sumerians of the Bronze Age invented money. Today, economic issues influence every aspect of daily life. My job at Fortunly is an opportunity to analyze government policies and banking practices, sharing the results of my research in articles that can help you make better, smarter decisions for yourself and your family.
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