CHARLOTTE, North Carolina, March 10, 2022 /PRNewswire/ — As we mark the second anniversary of the coronavirus pandemic shutdown, many Americans are still experiencing its financial and credit impact, but in very different ways. in a new investigation According to LendingTree®, the national leader in online financial services marketing, 30% of Americans have gone into debt while an additional 30% say they have improved their credit score.
Of those struggling with debt, nearly half (48%) blame inflation while 34% cite loss of income.
- The coronavirus pandemic has increased credit card debt for 30% of Americans, with inflation (48%) and loss of income (34%) cited as the top two drivers of debt. Even with the expansion of child tax credits, parents with children under 18 (40%) were more likely than any other demographic group analyzed to increase their debt during the pandemic.
- Many consumers have struggled to pay their bills on time during the pandemic. More than a quarter of cardholders (28%) have paid their credit card bills late at least once during the pandemic, with parents of young children (45%), millennials (42%), those who earn less than $35,000 (36%) and women (33%) face more late payments than other consumers.
- Card closures and credit limit reductions were common at the start of the pandemic, and some card issuers continue to do so. In the past 6 months, 14% of cardholders say their issuer reduced the limit on one of their cards, and 13% say their card was unintentionally closed by the issuer.
- More than one in five consumers (22%) have not checked their credit rating at all during the pandemic, while others have seen their ratings improve. Although many Americans have faced significant economic challenges, 30% say their credit scores are higher now than they were at the start of the pandemic.
- Consumers are looking for credit card rewards more than ever. About a third (32%) of Americans applied for a new credit card during the pandemic, and rewards were the #1 reason. 14% changed their primary credit card to maximize rewards, and 21% are cashing out more often credit card rewards.
“There was a huge disparity in how Americans were financially impacted by the pandemic, there’s no question about that,” says Matt Schulz, chief credit analyst at LendingTree. “Some people emerged from the last two years before the game, while others saw their financial world completely devastated.”
Credit Card Verification: 5 Steps You Can Take Today
No matter which pandemic credit story you relate to, these key strategies can help you maintain your credit health.
- Keep an eye on your credit score and credit report. It’s important to know where you stand so you can decide if your budget needs some attention. Anyone can access their free credit report from the three major credit bureaus. Additionally, LendingTree offers free monthly credit scores, credit monitoring and personalized credit health improvement recommendations.
- Use technology to your advantage. One of the best ways to avoid late payments, which can hurt your credit score, is to set alerts and use your credit account’s other tools. “Automatic payments can make late payment a thing of the past, and they’re usually easy to set up,” says Schulz. Just don’t get into the habit of only paying the minimum due, he adds, because that can lead to long-term debt.
- Analyze spending to see if current cards offer value. How you spend can change drastically over the years, and what you have in your wallet may no longer fit your lifestyle. “Take the time to review the rewards and benefits offered by your card, as well as the categories in which you spend the most and make sure they match. If not, it is probably time to buy a new card,” adds Schulz.
- Take debt repayment seriously. One tool that can help: balance transfer cards that offer 0% introductory periods or low APRs. “They can make a huge difference for people with credit card debt,” Schulz says. “Not only can they reduce the amount of interest you pay and the time it takes to pay off your debt, they can also streamline your finances.”
- Review monthly and annual budgets. “Budgets are living documents. They need to be reviewed, modified and updated regularly to ensure they are effective,” says Schulz. “Life has changed a lot for many of us over the past couple of years, so if you haven’t checked your budget lately, now is a great time to do so.”
To see the full report, visit: https://www.lendingtree.com/credit-cards/study/covid-19-and-credit-cards-inflation-debt/.
LendingTree commissioned Qualtrics to conduct an online survey of 1,249 consumers of February 7-10, 2022. The survey was administered using a non-probability sample and quotas were used to ensure that the base sample represented the overall population. All responses have been reviewed by researchers for quality control.
LendingTree is the nation’s first online marketplace that connects consumers to the choices they need to be confident in their financial decisions. LendingTree enables consumers to purchase financial services the same way they would purchase airline tickets or hotel stays, by comparing multiple offers from a national network of over 500 partners in a single search, and can choose the option that best suits their financial needs. Services include mortgages, mortgage refinances, auto loans, personal loans, business loans, student loans, insurance, credit cards and more. Through the LendingTree platform, consumers receive free credit scores, credit monitoring, and recommendations to improve credit health. LendingTree proactively compares consumers’ credit accounts to offers from our network and notifies consumers when there is an opportunity to save money. In short, LendingTree’s goal is to help simplify financial decisions for life’s meaningful moments through choice, education and support. LendingTree, LLC is a subsidiary of LendingTree, Inc. For more information, visit www.lendingtree.comcall 800-555-TREE, like our Facebook page and/or follow us on Twitter @LendingTree