Americans are facing extraordinary economic struggles in light of the COVID-19 pandemic. People have lost jobs; parents have had to find childcare or work with their children at home; businesses have had to close down. It may seem like there is no financial silver lining in sight.
However, according to recent reports, there is one piece of positive news: Consumer revolving debt, including credit card debt, is shrinking.
Three reasons credit card debt is down
Analysts suggest a few reasons why credit card debt is down across the U.S.
First, consumers are forced to spend less in some ways. With restaurants, sports, travel and retail shopping closed down or severely restricted, people have fewer opportunities to charge things on their credit card.
Second, people are cautious with their spending. Many are focused on paying down existing debt or putting money into savings instead of taking on new debt.
Finally, some credit card issuers have been relaxing their practices concerning late fees and interest charges. There are also banks that will allow consumers to pause their payments or even forgive a credit card balance. These are unusual measures, but they can reduce the risk of a complete default.
What this can mean for you
There are some valuable takeaways from these findings. One is that if you are struggling with credit card debt, there may be options to help you avoid defaulting that were not available a few months ago. It can be wise to ask your credit card issuer about these resources.
It is also worth noting that this is just one type of debt; other types of debt have not seen the same declines. In fact, nonrevolving debt, including student loans, has increased.
And unfortunately, sources expect that the decline may be short-lived. As the pandemic stretches on and fewer people receive stimulus money and other financial lifelines, there may be no option but to return to credit card spending.
Consumer debt – much like these statistics – can feel like a rollercoaster. There can be times when you feel optimistic and times when the situation seems hopeless. However, wherever you may be on this ride, there are debt relief options that can help. The attorneys at The Quinn Law Firm can talk to you about these options, including bankruptcy. Call 814-833-2222 for a consultation.