Home » Studies » Americans Divided on Credit Card Confidence in Wake of Coronavirus

Americans Divided on Credit Card Confidence in Wake of Coronavirus

Americans Divided on Credit Card Confidence in Wake of Coronavirus

*Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any credit card issuer. This site may be compensated through a credit card issuer partnership.

This article was last updated Apr 15, 2020. Terms and conditions may have changed. For the most accurate information, please consult the issuer website.

American credit cardholders are split on the impact the coronavirus is having on their ability to pay their credit card bills this month, according to a new report from CompareCards. Much of that divide is about gender.

Each month, CompareCards asks cardholders how confident they feel in their ability to pay their credit card’s monthly statement balance in full this month. For those who aren’t confident, we ask why. We also ask all respondents how often they’ve paid their statement balances in full the past six months and how often they expect to do so in the next six months. Those results make up the Credit Card Confidence Index, which we have released monthly since September 2018.

Not surprisingly, the percentage of cardholders saying they feel “not at all confident” in their ability to pay their credit card’s monthly statement balance in full this month shot higher in April. However, the percentage of those saying they’re “very confident” climbed, too, hitting its highest levels in a year.

So what gives? A deeper look in the numbers shows some stark differences between genders and age groups are helping drive this split. 

Key findings

  • 48% of cardholders said they are “very confident” in their ability to pay their monthly credit card statement balance in full this month. That’s up 2 percentage points from March and is the highest number in a year.
  • At the same time, 20% of cardholders said they are “not at all” confident. That’s up 4 percentage points from March and is the second-highest number in our index since February 2019.
  • Among those who were not confident to pay, 70% said the coronavirus was a reason why, up from just 16% in March. 
  • It’s clear that this crisis is hitting genders differently. The growth in “very confident” cardholders is entirely driven by men, while women dominated the higher number of “not at all” confident cardholders.
  • Baby boomers are nearly twice as likely as any other age group to say they were “not at all” confident in paying their card bills in full this month.

A study in contrasts

The coronavirus outbreak has had a seismic impact on the American economy. The fact that nearly 17 million Americans filed for unemployment in just a three-week period is incontrovertible proof of that. Given that, it shouldn’t be surprising that the percentage of cardholders saying they’re “not at all” confident in paying their card balances in full spiked this month. Millions of Americans are nervous about when and if that next paycheck will come and how they’ll make ends meet until then. 

Seven in 10 cardholders (70%) who weren’t confident said the coronavirus was a factor, a nearly five-fold jump from last month. About 1 in 3 unconfident cardholders (34%) pointed to a loss of income. (Note: Respondents were able to select multiple answers.) 

What may be surprising is the simultaneous jump in those who say they’re “very confident” in paying their balances in full. As the nation reels from the pandemic, nearly half of all cardholders (48%) said they were “very confident” they could pay their card balances in full this month. That’s the biggest number since April 2019.

We didn’t ask specifically what made them confident, but some possible reasons include:

  • Staying home means less spending, which leads to less credit card debt. The latest numbers from the U.S. Department of Commerce showed an 8.7% decline in retail sales in March, the biggest drop since tracking began in 1992.
  • The coming stimulus check will help them pay their bills. 
  • Relief about the stock market climbing off recent lows.

There can be as many reasons for confidence as there are confident people. Whatever the basis, it is clear that the coronavirus is impacting some groups quite differently from others.

Read Credit card issuers offering relief to coronavirus-hit customers

A significant gender gap

Study after study done by CompareCards and others over the years has shown significant differences between men and women when it comes to their behaviors, perceptions and beliefs related to money. This survey is no different. 

Here are some examples:

  • Women are twice as likely to say they’re “not at all” confident: 27% of women versus 13% of men
  • Men are far more likely to say they’re “very confident:” 54% of men versus 43% of women
  • Women are twice as likely to say they never paid their statement balance in full in any of the past six months: 29% versus 14% of men.

Also, the simultaneous growth that we saw in the percentages of “very confident” and “not at all” confident cardholders can be attributed largely to gender differences. 

  • 27% of women said they were not at all confident, up 4 percentage points from March; men’s percentages were up just a single point to 13%
  • 54% of men said they were very confident, up 6 percentage points from March; women’s percentages were unchanged at 43%. 

Why the change? Men were more likely than women to blame the coronavirus (75% to 68%), while women were more likely to blame a loss of income (35% versus 32% of men). That stands to reason, as March’s job report showed that women were more likely to have been impacted.

Beyond the numbers, however, is likely the fact that women’s financial margin for error is simply smaller than men’s. They make less money, they’re more likely to lead single-parent households and the list goes on. That’s before even considering that women are likely bearing most of the burden of child care (which now includes home-schooling for many) as millions of American families shelter in place amid the outbreak. Add it all up, and it makes sense that women would be less confident and more cautious in their approach to money.

Read Can’t pay credit cards bills because of the coronavirus? Make this call

Boomers are far less confident

For the most part, the differences among the different age groups aren’t quite as stark as the one seen between the sexes. The one exception: baby boomers. 

Boomers are almost twice as likely as any other age group to say they’re “not at all” confident about paying their card’s statement balance in full this month. Thirty percent of boomers said so, compared with 16% of both Gen Xers and millennials and just 11% of Gen Z. (Among those groups, they are also tied with Gen X as the most likely to say they were “very confident,” with 49% saying so.) 

Why the concern from boomers? Our data showed 59% blamed the coronavirus and 29% blamed loss of income, both percentages coming in slightly lower than the overall average. However, while they may be less troubled by the outbreak than other age groups, our survey results indicate that boomers were struggling more than other age groups even before the crisis really took hold. 

For example, a third of boomers (33%) said they had not paid their monthly card statement balance in full a single time in the past six months. A similar percentage (31%) said they don’t expect to pay their card balance in full a single time in the next six months. Both of those figures are at least 10 percentage points higher than the average for all credit cardholders, suggesting that this isn’t merely a virus-related issue. 

The bottom line: Don’t expect this confidence split to widen

I am surprised that we saw more “very confident” people in this month’s survey, but as the virus outbreak continues to grip America and the rest of the world, I expect confidence to fall.

As the crisis wears on, unemployment is likely to grow, leaving more people wondering how they’ll pay their bills. And even once the outbreak starts to subside and people are free to move around as they wish whenever that may happen a massive economic turnaround isn’t likely to happen overnight, so millions of Americans will continue to struggle financially. 

If the stock market continues to improve, that will help people’s spirits and their net worth. Lower credit card interest rates, driven by the Federal Reserve’s rate reductions, will make a difference in the longer term, as will any stimulus checks that go out. 

Ultimately, however, financial confidence is primarily about having a good job that you feel secure in. For millions of Americans, that is no longer a reality and won’t be for some time. Until that changes, it’s hard to see cardholder confidence continuing to rise. 

Methodology

CompareCards commissioned Qualtrics to conduct an online survey of 1,189 credit cardholders, with the sample base proportioned to represent the overall population. The survey was fielded April 3-6, 2020.

Generations are defined as the following ages in 2020:

  • Gen Z are ages 18-23
  • Millennials are ages 24-39
  • Gen X are ages 40-54
  • Baby boomers are ages 55-74
  • Silent generation are ages 75 and older

Recommended Posts: