(Bloomberg) — Despite the coronavirus and millions of jobless claims driving the U.S. economy deeper into recession, the flood of credit card delinquencies that some predicted has yet to materialize. Instead, card debt has actually gone down since the pandemic struck, with many consumers spending less while using bailout money to chip away at balances.
But that may not last. Even if Congress passes a new rescue package with more unemployment benefits, the cumulative effect of the ongoing economic catastrophe may finally trigger that default deluge, a new survey reveals. More than half of consumers with credit card debt said they will need more bailout money to make minimum payments over the next three months, but about the same number said employment will be more critical to avoiding default.
And right now, roughly 30 million Americans are claiming unemployment benefits.
“I think the overall trend [of credit card debt going down] masks some of the difficulty at the household level, and I do fear that we’re going to have more people relying on cards for financing and relying on cards just to make ends meet,” said Ted Rossman, an industry analyst at CreditCards.com, which sponsored the survey.