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Discover says fewer people are opting to defer credit card payments

Justin Ho Jun 10, 2020
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In the long run, it might be better for customers' financial health to pay off credit debt instead of deferring those payments. Olivier Douliery/AFP via Getty Images
COVID-19

Discover says fewer people are opting to defer credit card payments

Justin Ho Jun 10, 2020
Heard on:
In the long run, it might be better for customers' financial health to pay off credit debt instead of deferring those payments. Olivier Douliery/AFP via Getty Images
HTML EMBED:
COPY

With the pandemic, many credit card companies had set up ways for customers to defer paying what they would normally owe. Now, Discover says the amount of payments being deferred dropped 90% from April until early June — a sign that some distress may be easing.

If fewer people are deferring their credit card bills, they’re probably better able to pay them off, said Andrew Davidson at Comperemedia.

“Perhaps they got their stimulus check, perhaps they got unemployment benefits or maybe they even found a job,” Davidson said.

In the long run, Davidson said, it might be better for customers’ financial health to pay off that credit debt instead of deferring payments for longer.

“In most instances, interest still accrues, and so consumers are effectively kicking the can down the road,” he said.

Davidson said it’s also welcome news for the credit card companies when customers come off those deferral plans. That’s because banks don’t have to set aside as much cash in case people default.

Matt Schulz at Lending Tree said banks want to maintain good relationships with customers.

“It’s not just about somebody having a credit card, it’s about somebody having a credit card and then potentially being able to upsell them to a mortgage, or a car loan,” Schulz said.

And, he said, banks can now point out they were willing to cut customers some slack in a time of need.

COVID-19 Economy FAQs

Can businesses deny you entry if you don’t have a vaccine passport?

As more Americans get vaccinated against COVID-19 and the economy begins reopening, some businesses are requiring proof of vaccination to enter their premises. The concept of a vaccine passport has raised ethical questions about data privacy and potential discrimination against the unvaccinated. However, legal experts say businesses have the right to deny entrance to those who can’t show proof.

Give me a snapshot of the labor market in the U.S.

U.S. job openings in February increased more than expected, according to the Labor Department. Also, the economy added over 900,000 jobs in March. For all of the good jobs news recently, there are still nearly 10 million people who are out of work, and more than 4 million of them have been unemployed for six months or longer. “So we still have a very long way to go until we get a full recovery,” said Elise Gould with the Economic Policy Institute. She said the industries that have the furthest to go are the ones you’d expect: “leisure and hospitality, accommodations, food services, restaurants” and the public sector, especially in education.

What do I need to know about tax season this year?

Glad you asked! We have a whole separate FAQ section on that. Some quick hits: The deadline has been extended from April 15 to May 17 for individuals. Also, millions of people received unemployment benefits in 2020 — up to $10,200 of which will now be tax-free for those with an adjusted gross income of less than $150,000. And, for those who filed before the American Rescue Plan passed, simply put, you do not need to file an amended return at the moment. Find answers to the rest of your questions here.

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