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Credit Card Confidence Index

Credit Card Confidence Index

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This article was last updated May 22, 2020. Terms and conditions may have changed. For the most accurate information, please consult the issuer website.

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How are Americans feeling about their ability to pay off their credit card bills?

That’s what we track every month with CompareCards’ Credit Card Confidence Index — our exclusive monthly look at the mindset and payment habits of American credit cardholders.

Each month, we ask cardholders the following:

  • How confident are you that you can pay the monthly statement balance on all of your credit cards in full this month?
  • How many times have you paid all of your monthly statement balances in full in the past six months?
  • How often do you expect to do it in the next six months?

We also ask those who say they’re not confident exactly why they feel that way. We then present our findings, along with my analysis on trends I’ve seen in the numbers and how they fit in the general context of the economy as a whole, each month in the Credit Card Confidence Index.

Bookmark this page. We update it every month with a link to the most recent Confidence Index post and the latest historical charts showing the Index numbers going back to its creation in mid-2018.

The latest: Americans’ credit card confidence remains high despite COVID-19 crisis

Despite record-breaking unemployment claims and economic uncertainty in the wake of the coronavirus pandemic, Americans remain confident in their ability to pay their credit card bills. That optimism may come as a surprise given the financial chaos of the last few months, but there is reason to believe that it may even stick around for a little while longer. 

Key findings 

  • Just 15% of credit cardholders said they’re not at all confident in paying their full monthly statement balance on their credit cards this month. That’s the lowest percentage since May 2019 and is a 5 percentage-point drop from last month. (By contrast, 47% said they’re very confident this month.)
  • About 16% said they did not pay their monthly statement balances even one time in the past six months. That’s down 5 percentage points from April and is the lowest percentage since May 2019. (On the other hand, 33% said they paid in full in each of the past six months.)
  • Just 14% say they expect to pay their balances in full in zero of the next six months. That’s down 6 percentage points from April and is the lowest since May 2019. (Conversely, 34% said they expect to pay in full in each of the next six months.)
  • A gender confidence cap remains. Women are more than twice as likely to say they’re not at all confident in paying this month’s balances in full. Some 21% of women said so, compared to just 8% of men.


Why is confidence still high?

With more than 30 million Americans applying for unemployment insurance since mid-March, it may come as a surprise that confidence remains high among credit cardholders. After all, people without jobs – or people who are afraid they’re going to lose their jobs soon – don’t typically feel very good about their prospects for paying their bills. 

The coronavirus pandemic, however, is a bit of a different animal. 

Yes, unemployment is a big problem. Among those who weren’t confident, 52% blamed COVID-19, 29% blamed a loss of income, 10% blamed a lost job and 11% blamed a partner or spouse’s lost job. Those types of events predictably have an economic impact, and there can be little doubt that many Americans are being forced to rely on credit cards more today than they did a month ago simply to make ends meet.

So what makes this economic crisis different? Two things… 

First, many jobless Americans are receiving an extra $600 per week as per the Coronavirus Aid, Relief, and Economic Security (CARES) Act in addition to the typical unemployment benefits. That extra money is a big deal for many households struggling with joblessness and may even provide some families with a little bit of cushion to not just make ends meet, but even to pay down a small bit of debt. 

Second, people don’t have as many options to spend on as they typically do. They aren’t going to restaurants. They aren’t going to sporting events, concerts and plays. They aren’t doing big home renovations. And they likely aren’t booking airfares and hotel rooms. That means that most people’s credit card balances are a lot lower than normal. That allows folks whose financial lives haven’t been flipped upside down by the pandemic to knock down that debt and maybe even put a little money away. And for those who have been hit hard by the pandemic, it means there’s less pressure to go out and spend money that you might not have.

Among those who said they felt confident in paying their balances, more than 1 in 3 (37%) said they felt that way because they don’t expect to spend much money in the near future. 

Major gender gap is evident

Since we began the Confidence Index in September of 2018, a divide between men and women has usually been apparent. This month is certainly no different.

  • Among those who were confident, men were more than twice as likely to say it was because they felt stable in their job (42% of men versus 19% of women).
  • Women are twice as likely than men to say they never paid in full (21% versus 10%) in the past six months, but are also more likely to say they paid every time (36% versus 29%).
  • Women are also twice as likely than men to say they expect to never pay in full (18% versus 9%) in the next six months, but are also more likely to say they expect to pay in full every time (38% versus 31%).

Recent unemployment numbers show that women have been hit disproportionately harder than men by the pandemic. Add that to the fact that women typically have a smaller financial margin for error than men for any number of reasons and it seems likely that women will continue to feel less confident than men in their ability to pay their credit card bills.

The bottom line

As long as Americans’ spending options remain limited, confidence levels will likely remain high, even as the unemployment rate continues to climb.  

The larger question, however, is what happens once more of the country opens for business and people begin to break out their credit cards again. At this point, we have no idea when that may happen, but when it does, I think we’re likely to see confidence levels fall.

In the meantime, people who are still financially stable should continue to focus on paying down their credit card debt while also putting some money away in a rainy-day fund. It may seem strange to put money in a low-earning savings account instead of devoting it all toward paying down high-interest credit card debt, but it’s a good idea. That’s because having an emergency fund can help you break the cycle of debt once your credit cards are paid off. 

Think of it this way: Say you pay your credit card debt off and then the next day, you find out your car needs a $300 repair. If you have no savings, that repair is just going to throw you right back into credit card debt, but if you do have some savings, you can use it to pay for the repair, letting your credit cards remain balance-free. 

Prior months

Methodology

CompareCards commissioned Qualtrics to conduct an online survey of 897 credit cardholders, with the sample base proportioned to represent the overall population. The survey was fielded May 5-8, 2020.


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