NEW YORK – The coronavirus pandemic hasn’t stopped Americans from keeping up with their credit card payments, thanks in large part to government relief programs passed by Congress earlier this year.
For some, however, the ability to keep buying things with plastic and then pay the bill likely depends on whether current negotiations in Washington produce another round of economic aid. Many existing aid measures are set to soon expire.
The pandemic plunged the U.S. economy into a deep recession, costing millions of Americans their jobs and businesses. While the economy has recovered somewhat, the latest report on the job market shows the pace of hiring has slowed in the face of a wave of new COVID-19 cases.
While the banking industry has not shared industry wide statistics, the major credit card issuers — JPMorgan Chase, Bank of America, Citigroup, Capital One and American Express — have reported relatively stable delinquency rates despite the recession. Even Capital One, which lends to borrowers who may be less creditworthy, reported a decline in delinquency rates since a momentary spike earlier this year.
But both industry data and analysts have made it clear: The measures the government took earlier this year have worked, and without them, the industry and cardholders would be in deeper trouble.
“The stimulus and unemployment benefits have definitely helped the lower end of (credit card borrowers),” said Sanjay Sakhrani, an analyst at investment bank Keefe, Bruyette & Woods.
As part of the $2 trillion coronavirus aid bill Congress enacted in March, most Americans got a $1,200 stimulus check. While the Census Bureau found that the bulk of Americans used their funds toward household expenses, roughly one out of five used it to pay down debt. Experts also argue that some household expenses would have ended up on credit cards were it not for stimulus checks and healthy unemployment benefits.
In some ways, what’s going on in the credit card market also reflects the diverging fortunes of those impacted by the pandemic.