Americans Seeking Relief from Credit Card Issuers as Financial Confidence Continues to Suffer from COVID-19
Americans Seeking Relief from Credit Card Issuers as
Financial Confidence Continues to Suffer from COVID-19
ACCC’s Q3 ‘Financial Health Index’ shows nearly a quarter of those surveyed have sought payment deferral, interest rate reductions, or other credit card relief
Americans are weary from the financial impact of the COVID-19 pandemic – with a significant number seeking various forms of relief from their credit card issuers, according to a new poll by American Consumer Credit Counseling.
The ACCC Financial Health Index for the third quarter of 2020 found that 23 percent of respondents report they have asked credit card companies for some type of relief, such as payment deferral, reduced payments, or lowered interest rates. Of that group, approximately 20 percent of those who requested relief were denied, according to ACCC.
The findings emerge following ACCC’s second-quarter Financial Health Index released in July, where 25 percent of those surveyed said they had borrowed from their 401(k) accounts or other retirement savings.
“The pandemic is not going away, and American consumers have recognized that and are doing what’s necessary to keep their household budgets out of a crisis,” said Steve Trumble, President and CEO of American Consumer Credit Counseling. “Good communication with banks, credit card issuers, and other lenders is probably the best strategy if you find yourself falling behind on payments. The earlier you reach out for assistance, the better.”
More than 215,000 Americans have died from COVID-19 during the pandemic, which first descended on the U.S. in March. Public health officials are warning of a new surge of infections as winter approaches. Millions have lost jobs, and entire economic sectors have shut down or slowed dramatically. However, there have been some promising signs. The unemployment rate in September fell to 7.9 percent from a high of 14.7 percent, and it beat market estimates by 0.3 percent.
ACCC’s Q3 poll of 441 Americans surveyed respondents aged 25-65 with incomes of $100,000 or less. It was conducted in September.
The number of respondents who reported having zero confidence in the U.S. economy fell back to 16 percent in the September survey, from the 23 percent who reported zero confidence in June. But income security remains an issue for many Americans. Only 22 percent of those polled said they are “very confident” in their income security six months from now – a decline from 26 percent in June. A total of 10 percent said they have no confidence in their income security six months from now.
The ACCC Financial Health Index poll has a margin of error of plus-or-minus 5 percent.
The U.S. economy added 1.4 million jobs in August, and the unemployment rate fell in both August and September. According to Pew Research Center, half of adults who say they lost their job during COVID-19 are still unemployed.
Overall, household debt continues to be an issue. Close to 45 percent of those surveyed for the Q3 Financial Health Index said their debt-to-income ratios were either somewhat unhealthy or very unhealthy. And 38 percent said they were either not so confident or not at all confident in their ability to reduce debt by at least 10 percent over the next six months.
Many major credit card companies are offering financial relief programs. For example, American Express offers cardholders a short-term repayment plan for 12 months, in which minimum payments and interest rates are lowered. Bank of America cardholders can call and request payment deferrals. Chase Bank stated customers could delay up to three payments on their credit cards, though interest will continue to accrue.
“The initial shock and surprise of this historically devastating event may have worn off a bit or dissipated. But managing finances during an extended economic crisis is something all Americans should be prepared for,” Trumble said. “Credit card issuers and other lenders are being flexible with those who are hardest hit, but you won’t get assistance if you don’t ask for it. This is no time for consumers to be uninformed about their options.”
Financial counselors at ACCC continue to provide callers with budget counseling and assistance with creditors while providing further assistance through ConsumerCredit.com and the ACCC Talking Cents blog. Counselors are also directing clients to resources such as the Ready.gov section on financial preparedness and the downloadable EFFAK (Emergency Financial First Aid Kit) guide.
About American Consumer Credit Counseling
American Consumer Credit Counseling (ACCC) is a nonprofit credit counseling 501(c)(3) organization dedicated to empowering consumers to achieve financial management through credit counseling, debt management, bankruptcy counseling, housing counseling, student loan counseling, and financial education concerning debt solutions. To help consumers reach their goal of debt relief, ACCC provides a range of free consumer personal finance resources on a variety of topics including budgeting, credit and debt management, student loan assistance, youth and money, homeownership, identity theft, senior living, and retirement. Consumers can use ACCC’s worksheets, videos, calculators, and blog articles to make the best possible decisions regarding their financial future. ACCC holds an A+ rating with the Better Business Bureau and is a member of the National Foundation for Credit Counseling® (NFCC®). For more information or to access free financial education resources, log on to ConsumerCredit.com or visit http://www.consumercredit.com/financial-education.aspx