WHEN THE PANDEMIC HIT AND the restaurant that Eric S. managed in Brighton, Mich., closed its doors temporarily, Eric filed for unemployment insurance benefits. When the business reopened a couple of months later and Eric returned to work, his hours were cut in half.
Although Eric and his wife managed to keep up with their mortgage payments, the couple found themselves strapped for cash and began to fall behind on their credit card bills. By September, they had accrued about $13,000 in credit card debt, and Eric’s credit score had dropped nearly 75 points, to the low 600s. “I felt like I was losing control,” he says. “It also put a lot of stress on our marriage.”
The couple sought out a credit counselor, who helped them retool their budget—getting rid of their Hulu and Netflix subscriptions alone saved them $70 a month—and begin paying down their debt. Just two months later they had shaved $3,000 off their total balance. “We’ve learned how to manage our money a lot better from this whole experience,” Eric says.
THE DEBT DIVIDE
The coronavirus crisis has been a double-edged sword for Americans in terms of debt. First, the good news: After receiving an infusion of cash from stimulus checks last spring, millions of consumers used their relief funds to pay down debt. On April 15, 2020, as the first major wave of checks hit Americans’ bank accounts, there was a near-instantaneous increase in debt payments, according to a TrueAccord study of data from 12 million U.S. consumers.
Moreover, a majority of Americans have managed to stay on top of their credit card bills, an October LendingTree study found. The survey, which analyzed credit reports of nearly 7,300 consumers who had paid off at least $1,000 in credit card debt in a month’s period, found that nearly 6 in 10 borrowers (59%) maintained a zero balance on their credit card three months later. (The average FICO score even hit an all-time high of 711 in July, according to Fair Isaac Corp., the data analytics firm behind the credit rating.)
However, “in some ways it’s a tale of two cities,” says Bruce McClary, a spokesman for the National Foundation for Credit Counseling (NFCC), which represents nonprofit credit counseling agencies. “While a number of Americans have been able to pay down their credit card debt during the pandemic, some people are really struggling because they’ve been laid off or have had their hours cut.” Many of those people don’t have a financial safety net, he says, “so they’ve had to fall back on credit cards.”
There’s also a large number of Americans grappling with unpaid medical bills because of the pandemic. By last June, roughly 7.7 million workers had lost jobs with employer-sponsored health insurance since mid-March, a Commonwealth Fund report found; these health plans covered 6.9 million dependents. And despite some job gains in the third quarter of 2020, nearly 7 million Americans were still collecting unemployment insurance at the end of October, the U.S. Department of Labor reports.
The U.S. saw more than 65,000 COVID-19 hospitalizations between March 1 and October 24, according to data from the Centers for Disease Control and Prevention. Nationally, the average charge for a hospital stay for a COVID-19 patient was $73,300, according to FAIR Health Inc., a nonprofit health care industry tracker.
CONQUERING CREDIT CARD DEBT
Continue reading your story on the app
Continue reading your story in the magazine
WORK FROM HOME— Wherever That Is
The pandemic has made it easier to work from a distance, but some far-flung workers have to follow special rules for taxes, health care and insurance.
Tame the Cost of Pet Care
If you’ve added a dog or cat to your family, consider pet insurance to manage routine and unexpected veterinary bills.
Invest in These Great Places to Work
These companies do well by their workers, which can translate into gains for investors.
SAVE MONEY WITH AN ELECTRIC CAR
Although some are still a pricey luxury, we found EVs that are fun, affordable and eligible for tax incentives.
The Right Robo Adviser for You
We sort through the evolving world of automated investment services, including some that offer a human touch.
Give Your Child Some Credit
Naming your child as an authorized user on your credit card can be a great way to set them up with a healthy credit report.
Get Your Retirement Back on Course
Even the most diligent savers can encounter obstacles on the road to retirement, but the past few months have delivered unprecedented hazards. We’ll help you come up with a recovery plan.
FEDERAL DEBT : A HEAVY LOAD
The debt continues to grow, but record-low interest rates could ease the long-term damage.
Best 401(k) Funds From Fidelity
We rate the most popular actively managed offerings for retirement accounts.
WHERE TO INVEST IN 2021
With the election in the rearview mirror, investors can turn their full attention to the economic recovery and progress on the pandemic.
Blue Öyster Cult
FOUNDING GUITARIST BUCK DHARMA UNWRAPS THE SYMBOL REMAINS, THE HARD ROCK PROGENITORS’ FIRST ALBUM OF NEW MATERIAL IN 20 YEARS
bold and beautiful
bold and beautiful
B&B'S QUINN TO ERIC: TAKE ME BACK
Eric finds a sympathetic ear in Shauna, despite the fact that Quinn doesn’t want her estranged pal living chez Forrester.
AMM Cover Model: Dan Decker
So you worked really hard to build a nice body and you wanted to show off your muscles. At the same time it wasn’t too much to ask to be dressed in fine clothes. Raise your hands if you wanted to see more muscular guys on the runway for fashion show. the interview:
Fresh Served
An American Classic Built With a Modern Twist for a Retired Vet
Zooming into the Future
This year, ZOOM transformed from a business tool into a lifeline. How did the company keep up? Simple, says founder and CEO Eric Yuan: It focused on fundamentals.
TIGER'S MATCH PLAY LANDS IN THE ROUGH
Might not stay the course with marriage-minded galpal
Scene & Heard
BEHIND the SCENES!
GLAM FAIRY
There are few Choppers in the Industry that are immediately recognizable and have achieved almost a cult following.
B&B: QUINN LEARNS SHAUNA MOVED IN WITH ERIC
After giving Quinn (Sofer) the boot, Eric (John McCook) invites Shauna to move into the mansion.