Consumers brace for more debt amid coronavirus
Many Americans are still waiting on relief checks and unemployment benefits, possibly forcing some to run up credit card debt to cover expenses.
About one-quarter of eligible respondents hadn’t received their one-time stimulus payments yet while 54% of those who had applied for unemployment benefits hadn’t received them, according to a survey from LendEDU conducted on May 5 and released on Monday.
One-third of respondents said they will or have been “taking on more credit card debt than desired to cover” their expenses. That number jumped to 42% for those who haven’t received money from unemployment yet and ticked up to 38% for those waiting on relief checks, according to the survey.
However, Americans are also becoming less worried about covering monthly payments for existing debt. Half of respondents in LendEDU’s May survey said they were worried about paying their mortgage. That’s down from 57% in LendEDU’s March 18 survey and 60% in the company’s April 1 report.
In the May survey, 44% of respondents said they were concerned about making credit card payments, 10 percentage points lower than the March report. Fifty-five percent were concerned about covering their monthly student loan payments in May, down from 63% in March.
These declines could be because financial institutions are working with consumers on repayment options. Additionally, borrowers don’t have to make payments on federal student loans through the end of September.
Finally, as officials begin to reopen businesses, many consumers aren’t eager to start visiting restaurants and stores, according to LendEDU’s survey. About a quarter of respondents said it would be one to three months after social distancing measures are lifted before they start going out and spending money. Another 18% said it would take three to six months while 16% said two weeks to one month and 10% said immediately.