Poll: 51% of U.S. adults accrued more debt during the COVID-19 outbreak

The coronavirus continues to wreak havoc on people’s health and financial lives – 51% of U.S. adults with credit card debt have added to it during the pandemic, according to a CreditCards.com poll.

This represents quite an uptick since the last coronavirus debt poll we conducted in May 2020, which showed that 23% of U.S. adults with credit card debt added to it during the pandemic.

The new survey revealed that nearly half of those U.S. adults who accrued debt (44%) specifically blame the pandemic.

It also divulged that millennials are struggling more than any generation – more than half of them (56%) have gone more deeply into debt since March 2020 and 55% of those respondents said it’s directly related to the pandemic.

“Millennials are overrepresented in the workforce right now, especially in service jobs, which are very heavily affected by the pandemic,” said Jake Hill, CEO of DebtHammer.

In addition, he pointed out that many millennials have been laid off, so of course, they’re struggling to make payments.

See related: 1 in 10 Americans behind on monthly bills due to COVID

Credit card debt poll: notable findings

Here are some other key results from our credit card debt poll:

• Stimulus money could help: This survey was conducted in December, right before the second stimulus deal was reached in Congress. Sixty-three percent of credit card debtors said a lack of additional stimulus money from the government could affect their ability to make minimum credit card payments over the next three months (38% said it would affect them in a major way and 25% said a minor way). Even more millennial card debtors (77%) said they’d be affected (49% major and 28% minor), and for those with incomes below $40,000, 73% reported they would be affected (48% major and 25% minor). When it comes to gender, 68% of women and 57% of men reported they would be affected.
• The COVID-19 curse: Almost two-thirds of credit card debtors (64%) said that if COVID-19 continues to surge, it will affect their ability to make minimum credit card payments in the next three months (38% major and 27% minor). More than half of credit card debtors (54% ) said their ability to make minimum payments would be affected if a successful COVID-19 vaccine is not widely available by June 2021 (28% major and 26% minor).
• Income dictates debt: Credit card debt is most common in the $40,000 to $80,000 income bracket (48%) and you’re more inclined to have credit card debt if your annual household income is over $80,000 (40%) than if it’s less than $40,000 (36%).
• Geography skews the mix: More than half of Northeasterners (55% ) who added to their credit card debt since COVID-19 began blame the pandemic, compared with 32% of Midwesterners, 43% of southerners and 45% of westerners.
• Optimism persists: More than half of debtors (64% ) said they thought they’d be debt-free within 10 years, including 48% who said it would happen within five years and 14% who estimated being debt-free in just one year. Only 29% of debtors said it would take more than 10 years to get out, including 7% who never expect to be debt-free. Another 7% said they didn’t know when they will be debt-free and 13% of student loan debtors said they thought they’d never be debt-free.

The survey of 2,475 U.S. adults, including 957 adults with personal credit card debt, was conducted online between Dec. 16-18, 2020. See survey methodology.

The more you make, the more you spend

Ben Reynolds, CEO and founder of Sure Dividend, said one reason households with an annual income of $80,000 or more are likelier to have credit card debt is that they might be a little careless with their spending, thinking they have the money to afford it.

Those who get promoted and receive raises might also fall into the habit of spending more on expensive luxury items since they think they can manage the extra expense without consequences, he pointed out.

But Reynolds also warned that this group leaves itself vulnerable to spending more than it can afford because it might not regularly check monthly expenses.

Andrew Latham, certified personal finance counselor, finance analyst and managing editor of SuperMoney, added that while this statistic might sound counterintuitive at first glance, it is to be expected.

“Wealthier households are more likely to qualify for credit cards since income and credit scores are typically correlated – and they are also more likely to qualify for higher credit limits, which enables them to afford larger purchases,” Latham explained.

People with lower incomes might be more careful with their spending or might have lower credit limits available to them, he added, which might make them prone to less credit card debt – especially since most of their paychecks might be going toward essential bills instead of luxury items that higher-income households can initially afford.

See related: 9 ways to carry card debt responsibly in the coronavirus crisis

Geographic and gender debt differences make sense

Jim Pendergast, is SVP of altLINE, a division of The Southern Bank Company dedicated to commercial finance and specialty lending.

He suggested that geographic differences in credit card debt may be influenced by cost of living.

“Places like the Northeast and the West Coast mean higher costs of living, especially when it comes to housing and utilities,” he said.

“Cost-of-living expenses were only exacerbated by the pandemic, so folks may have turned to credit cards to pay monthly bills, such as utilities and rent, during financially turbulent times.”

He also contended that more women than men saying they’d be impacted by a lack of stimulus deal likely stems from larger percentages of women leaving the workforce.

“We know women have disproportionately taken on increased caretaker duties during stay-at-home orders and lockdowns,” he noted, which has “put the strain on their careers whether they were able to work from home or not.”

As a result, he said, more women opted out of the workforce, which could have led to precarious financial situations in which relying on credit cards became the default.

See related: Women account for all December job losses

There is light at the end of the debt tunnel

Our survey also reported that 70% of U.S. adults have personal debt of some kind and that 48% of baby boomers, 47% of Gen Xers and 33% of millennials have credit card debt.

But the survey also showed that people felt hopeful about getting out of it – to the tune of 64% of debtors saying they believed they would be debt-free within 10 years.

“I’m pleasantly surprised at how optimistic many debtors are feeling about how much they owe,” said Ted Rossman, industry analyst for CreditCards.com.

This is important, he explained, because getting out of debt is often more psychological than mathematical.

A big part of the solution is to organize your budget so that you have more money coming in than going out each month, Rossman said.

“Whether it’s taking on a side hustle to earn more income or cutting back on expenses, finding extra money to pay off your debts can save you a lot of money in interest and free up your time and energy for other things.”

See related: Taking financial control amid a pandemic

Survey methodology

CreditCards.com commissioned YouGov Plc to conduct the survey. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,275 adults, including 957 adults with personal credit card debt. The survey was conducted online from Dec. 16-18, 2020.