Are We Stumbling Our Way Into A New Credit Crisis?
Underemployment and unemployment are way up. People have to spend more to feed their families. Large savings withdrawals have accelerated. So what other lifeline is there? Taking on consumer credit may be the only remaining answer people have, and the change in credit card balances, when compared to a year ago, seems to support that. As of September, median credit card balances for people in households earning under $50,000 per year are up 38% from the same point in 2019.
“My husband’s hours were getting cut,” Jessica said. Her husband works for D.C. Metro and transportation was slowing down. “Then I started going into the super negatives.”
With no idea how long the pandemic would last, and what the economic fallout would be, Jessica decided to hold on to her cash. She used credit cards to keep the business going. As she said, “All I had to leverage was decent credit.” "
Rhiannon's husband's income went down when he took COVID-19 leave and their bills went up having their whole family at home. (She put $400 of her SaverLife grant toward her credit card bill.)
“We were spending more on groceries than normal,” Rhiannon said. “We used credit cards and saved everything we could. We didn’t do any unnecessary spending.”
