According to a recent news report, a whopping 59 percent of American credit cardholders - about 110 million adult Americans - marched right into the COVID-19 pandemic with existing outstanding credit card debt. This figure could start rising soon as the coronavirus situation continues to evolve and unleash its wrath.
As the US economy continues to slow down and people's jobs and income streams become increasingly squeezed and jeopardized, it is seriously difficult to put aside worries about our debt, mortgage, bills, child care expenses, home maintenance expenses, utilities, medical care, groceries and even meals. Case in point, just two weeks ago, over 3.2 million Americans filed for unemployment benefits.
It certainly does not help to know that these rapidly unraveling financial woes that are bugging us more and more by the second are in addition to worries about the coronavirus itself. As of time of writing, the US government's top infectious diseases expert Dr Anthony Fauci warned that the COVID-19 pandemic could cause over 100,000 deaths in the United States alone. As for the latest development in the United States at the time of writing, President Trump has extended the federal government's social distancing guidelines through the end of April. The country's total recorded number of coronavirus-linked deaths has exceeded 2,400.
COVID-19 has hit the world's economies hard and fast; we can only hope and pray for the normalcy that we had taken granted for to return as quickly and as intact as possible. As much as it hurts to know, we also have to recognize that access to credit in general is now being tightened with a potential recession lurking around, coupled with mass shutdowns across the United States and around the world.
The uncertainty that we all are feeling right now has sent more people scrambling for help from credit cards and unsecured loans to tide things over at least for the time being. It does not take a genius to guess that lenders are getting increasingly concerned about the possibility of a skyrocketing default rate on unsecured loans. Who could honestly blame them for hesitating to extend credit to new customers who might pose default risks?
While credit card issuers and financial institutions have in place temporary relief measures to help their existing customers and small, medium businesses tackle financial hardship brought forth by the COVID-19 pandemic, it is crucial that you know what you're getting into no matter how ‘nice' the options available to you are in such acutely distressing times.
For instance, we do not recommend you increase your credit line to cope with the coronavirus pandemic even though it sounds incredibly tempting when you're cash-strapped. The tendency to overspend and dive deeper into debt is very real, and should be avoided at all cost - especially if you aren't one to be exceedingly disciplined when it comes to money matters!