While not everyone is actually getting ill from COVID-19, we are all feeling the far-reaching effects of the virus. The pandemic is especially wreaking havoc on Americans’ financial health. Before the virus reached the US, many were already experiencing financial challenges. A study in 2019 revealed that almost half of respondents — 45% — said they have $0 in a savings account. Another 24% said they have less than $1,000 in savings. The top reason respondents gave for not having enough savings was because they were living paycheck to paycheck. Nearly 33% said this obstacle was keeping them from saving, and about 20% said a high cost of living prevented them from saving more.
Add to this of course, the massive collective credit card debt Americans have incurred. According to the Federal Reserve, total credit card debt has risen year after year, and surpassed $1 trillion in 2019.
Not enough savings, not enough income and already trying to manage high credit cards bills. Then COVID-19 enters the picture. In six weeks, close to 30 million jobs are lost. That’s 30 million people, who based on the overall statistics probably didn’t have a large emergency savings fund and already had accumulated credit card debt. With no income and no cash savings, where else can they turn but to credit cards.