Credit Cards and COVID-19 (SHOCKING NEWS About How We Use Credit Cards vs. Debit Cards In 2020!)

The Wall Street Journal had a VERY INTERESTING article today titled ‘Debt on Credit Cards Falls Amid Pandemic.’ Click "Show More" to see Ad Disclosure. My first thought was, “WHAT?! No way…I have to read this!” Here’s what I learned... Despite the astronomical unemployment rates we’re seeing every day in the news, many people are NOT getting deeper into credit card debt. In fact, we’re seeing the exact opposite! 💳👉VIEW CREDIT CARD OFFERS! https://markscreditcards.com/offers 🛍 RAKUTEN - Earn Cash Back! http://markscreditcards.com/rakuten ‼️ GET FREE STOCKS FROM WEBULL when you open an account & deposit $100: http://markscreditcards.com/webull Peter Maynard, SVP at Equifax (the credit-reporting firm that tracks consumer borrowing and issues your credit report), said that consumers are “continuing to pay down balances” during this time, and they’re “using the injection of government stimulus…to put themselves in a better position.” Chief Executive Roger Hochschild at Discover Financial Services seems to agree, saying, “The cardholder base, given the economic level of distress, has held up remarkably well.” In the U.S. at large, the total amount of credit card debt DECREASED by 11% (approximately $100 billion) between February and the end of June. Moreover, credit card debt KEPT FALLING even while the state lockdowns were eased and retail spending started to rise again. When we look at the data reported by credit card companies, we see that the coronavirus pandemic has actually shifted consumer spending habits in a big way. COVID-19 sparked a movement TOWARD DEBIT CARDS and AWAY FROM CREDIT CARDS. As wild as these trends and data appear, here are the likely reasons for it all: 1. Many people have been laid off, furloughed, or had reductions in pay. Additionally, many businesses have been shut down temporarily or permanently. With less money coming in and fewer places at which to spend, overall spending across many financial products has likely decreased (which is why we’re also seeing record-breaking savings rates, too). 2. With multiple rounds of stimulus payments on the business and personal side, there has been an influx in cash. It seems that a decent percentage of people are using these funds to pay down credit card debt and improve their financial situations as best they can. 3. Stimulus payments have been issued via direct deposit, physical checks, and debit cards. These funds end up in people’s checking accounts, and the simplest way to access those funds is via debit card. So it’s only natural that many people are now using debit cards more than credit cards because that’s where their money is. Overall, an increasing reliance upon cash is a GOOD THING for many people. However, for those of you who ARE financially responsible (i.e. you use credit cards as if they were debit cards), it still makes more sense to use credit cards and simply use your stimulus payments to pay off the balance. That way you can earn cash back (or even credit card points and miles for future travel) rather than nothing at all. Ultimately, you should use the payment method that puts you in the best position possible during this health pandemic. Regardless of your payment preference, it’s still very interesting to see reports showing how consumers are using credit cards vs. debit cards in their everyday lives. In so many ways we are operating without precedent, so hopefully we take this time to learn how to handle health crises and their corresponding economic and financial impact. Disclosure: This site is part of an affiliate sales network and receives compensation for sending traffic to partner sites, such as CreditCards.com. This compensation may impact how and where links appear on this site. This site does not include all financial companies or all available financial offers. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. Mark Reese is not a financial advisor. #creditcards #covid19 #creditcarddebt