Home Breaking News Facing a double-whammy, millennials rack up credit card debt during the pandemic

Facing a double-whammy, millennials rack up credit card debt during the pandemic

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Facing a double-whammy, millennials rack up credit card debt during the pandemic

Aimee Picchi, Special to USA TODAY
Published 12: 01 a.m. ET Jan. 27, 2021

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As families fight in the original pandemic financial system, right here is what you have to grasp about loans, companies and how you can acquire the handiest deal.

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The pandemic’s financial hit is making an outsize impact on one generation’s debt, with a greater share of millennials reporting they have added to their credit card debt since March compared with older generations.

About 56% of millennials say their credit card debt has grown since the start of the pandemic, compared with 53% of Generation Xers and 46% of Baby Boomers, according to a original examine from CreditCards.com. About 55% of millennials specifically blamed the disaster for their snowballing balances, while fewer than half of Gen Xers and Baby Boomers pointed to the pandemic as the cause of their rising debt, according to the mid-December examine of 2,475 adults.

The reason isn’t as a result of melancholy spending decisions, but extra doubtless stems from the pandemic’s greater financial impact on millennials compared with older generations, says Ted Rossman, CreditCards.com trade analyst. Millennials have suffered a double-whammy, with the generation trailing in wealth creation in the years before the pandemic, while roughly 6 in 10 said they or a family member lost profits between mid-March thru mid-December, according to Census data. 

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By comparison, 5 in 10 americans between 55 to 64 said they lost profits during that same length, Census data came upon. 

“It really comes back to those two expansive factors: millennials are the perhaps to have had their profits compromised and least doubtless to have adequate emergency savings,” Rossman says. 

In the years leading up to the pandemic, the millennial generation was falling in the back of by the yardsticks normally earlier to measure financial growth, such as homeownership and wealth. That placed many of them in a extra vulnerable financial place when the pandemic hit.

Millennial education divide

While the generation as a complete has trailed older Americans in building wealth, there is a divide between millennials with and without college degrees. A fresh Federal Reserve of St. Louis gape came upon that college-educated millennials had about 6% less wealth than older generations at the same age, but americans who handiest had highschool degrees had 44% less wealth. 

The pandemic has caused what some economists listing as a Okay-shaped restoration, with wealthier professionals continuing to work remotely while lower-paid staff in carrier jobs have suffered increased rates of unemployment.

That may explain somewhat conflicting credit card trends, Rossman adds. Even supposing his company’s examine came upon 51% of Americans overall say they have added to their credit card debt since the pandemic began, the nation’s total credit card debt and delinquencies have declined at the same time, Rossman successfully-known.

“Larger-profits of us have saved a lot because they are commuting less, going out to eat less — they can bank those savings,” Rossman says. “Individuals in lower-profits jobs, extra carrier-oriented jobs, those are the americans that are struggling the most and least geared up to handle a disaster savor this.”

The two rounds of stimulus checks also helped many households weather the pandemic. Without that aid, it’s doubtless that even extra Americans would have accrued original credit card debt by now, Rossman adds. 

Unfortunately, it’s harder now to glean a balance-transfer credit card than before the pandemic as credit card companies have tightened their standards, Rossman says. His advice to buyers who want to pare their debt: Take into account transferring debt to a lower hobby-rate personal loan, or work with a non-income credit counselor to accomplish strategies to pay off debt. 

“They can let you negotiate a lower rate and maintain your hand thru the consolidation path of,” he notes.

Aimee Picchi is a trade journalist whose work appears in publications including USA TODAY, CBS Information and Individual Reports. She spent almost a decade keeping tech and media for Bloomberg Information

Read or Share this memoir: https://www.usatoday.com/memoir/money/personalfinance/2021/01/27/credit-cards-debt-grows-millennials-during-covid-pandemic/4250479001/

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Facing a double-whammy, millennials rack up credit card debt during the pandemic

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