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More Than Half of Americans Find Difficulty in Minimizing Debt During COVID-19 Pandemic According to BAI and NFCC Survey

CHICAGO – June 17, 2020 – A new survey commissioned by BAI, a nonprofit independent organization that delivers the financial services industry’s most actionable insights, and the National Foundation for Credit Counseling (NFCC), details the impact on consumer spending and saving habits in light of COVID-19. This survey was conducted online by The Harris Poll among over 2,000 U.S. adults and tracks key areas of personal finance behavior and knowledge among Americans.

The survey, conducted in May 2020, notes more than half of Americans (55%) find some factors make it more difficult to minimize their debt, most commonly due to reduction of income (22%), which has increased significantly since both March 2020 (19%) and March 2019 (17%). Others say unexpected financial emergencies (18%), job loss (13%), and/or the inability to find room in the budget to increase payments (13%) has made it more difficult to minimize their debt.

Even so, nearly half of adults (47%) – about the same proportion as in March 2020 (46%) – are extremely or very confident in their ability to meet their future financial obligations, with 21% saying they are extremely confident (also 21% in March 2020).

“Financial services leaders need to understand their customers are most concerned about short-term cash flow and are adjusting their spending accordingly,” said Debbie Bianucci, President and CEO, BAI. “Strategies that help build deposits for short-term savings could be well-received, along with services to assist with short-term challenges in meeting financial commitments.”

In looking at how consumers are addressing short-term needs, new credit cards have not been a primary strategy. The proportion that have applied for a new credit card in the last 3 months (10%) is significantly lower than the proportion who reported having applied for a new credit card in the last 12 months in March 2020 (19%), though this proportion is on par with 2011 (10%) when the U.S. was still in recovery from the Great Recession of 2009.

“The challenges related to debt reduction are amplified for those who have lost their jobs as a result of the pandemic,” said NFCC President and CEO Rebecca Steele. “Insufficient levels of emergency savings coupled with prolonged periods of unemployment make it more essential for the expansion of long-term debt management solutions provided by nonprofit credit counseling agencies.”

One of the most reported personal finance concerns remains not having enough “rainy day” savings for an emergency (13%). The proportion of consumers reporting that they are most worried about retiring without having enough money set aside (8% vs. 13% in March 2020 and 17% in March 2019) is the lowest level reported since the question was first added to the Financial Literacy Survey in 2014.

“As a result of a focus on accessibility to capital and reduced spending, we are seeing strong deposit growth from both consumer and small business accounts for financial services organizations since the beginning of shelter-at-home orders in March,” said Karl Dahlgren, managing director, BAI. “Leaders should be aware, though, that the circumstances that spurred this growth – such as delayed tax filing and decreased consumer spending – will end later this year, possibly prompting a moderate downturn in deposit growth.”

About the Survey

The 2020 Financial Impact of COVID Survey was conducted online within the United States by The Harris Poll on behalf of the National Foundation for Credit Counseling and BAI between May 12 and May 14, 2020 among 2,067 U.S. adults ages 18+. This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated. For answers to questions about survey methodology, including weighting variables, please contact [email protected].

About BAI

As a nonprofit, independent organization, BAI has delivered the financial services industry’s most actionable insights for more than 95 years, enabling leaders to make smart business decisions every day. We’re passionate about the trusted information and powerful tools that provide leaders with the clarity and confidence needed to drive positive change and move the financial services industry forward. That’s why we provide in-depth, proprietary research to 30 of the top 50 banks and numerous others, support more than 2,000 financial services organizations with compliance and professional development training, provide trusted, relevant thought leadership through BAI Banking Strategies reports, podcasts and webinars, and offer specialized events and programs. For more information, visit www.bai.org.

About NFCC

Founded in 1951, the National Foundation for Credit Counseling® (NFCC®) is the nation’s first and largest nonprofit dedicated to improving people’s financial well-being. With nearly 600 member offices serving 50 states and Puerto Rico, our NFCC Certified Credit Counselors are financial advocates, empowering millions of consumers to take charge of their finances through one-on-one financial reviews that address credit card debt, student loans, housing decisions, and overall money management. Make one of the best financial decisions of your life. For expert guidance and advice, call (800) 388-2227 or visit www.nfcc.org today.