A new report shows nearly 15 million credit card bills went unpaid in April. This staggering number highlights the deep economic impact of the coronavirus pandemic on the country.
The report comes from TransUnion, a credit-tracking firm.
Credit Card Bills Going Unpaid
According to TransUnion, 15M credit cards were in ‘financial hardship’ programs. These programs allow the deferral of repayments, giving borrowers relief during hard financial times.
15M credit cards total to 3% of the cards TransUnion tracks. When the scale of the pandemic first became apparent, unpaid credit card bills were not an unlikely scenario. Since the economy is expected to contract further until the end of June, it is highly likely the number of credit card bills going into hardship programs could go even higher in the coming months.
Unpaid Auto Loans Also Increase
The TransUnion report also shows unpaid auto loan repayments rising. Nearly 3 million auto loans were in hardship programs during the month of April. These unpaid auto loans account for 3.5% of the total auto loans TransUnion tracks.
Last year, the percentage of unpaid credit card bills and auto loans in financial hardship programs were 0.03% and 0.5% respectively.
Along with credit card bills and auto loans, even personal loans saw an increase in deferrals or placement in hardship programs in April. Rising unemployment and a lack of legislation for dealing with the problem means these credit-related problems may keep increasing.
Fed Chair Powell Says Economy May Not Recover This Year
The statistics around unpaid credit card bills and auto loans comes only days after Fed Chair Powell said the economy may not recover in 2020. According to Powell, a full-scale recovery is only possible when all participants of the economy can return to work safely. This can only happen once a vaccine becomes available. Thus, Powell said a full recovery may only come at the end of 2021.
The Federal Reserve Chairman also urged Congress to spend more on relief legislation and forget about the national debt for the moment. Powell believes the rate of growth and employment may not grow quickly after the pandemic if Congress hesitates to spend now.
The statistics from TransUnion detailing unpaid credit card bills and auto loans only emphasizes the economic pain of the country. House Rep Jayapal recently introduced the Paycheck Recovery Act. The act will help steady the rise of unemployment by covering the salaries of workers earning up to $90,000. If passed, the legislation could seriously stem many unemployment issues.
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