COVID-19

Discover says fewer people are opting to defer credit card payments

Justin Ho Jun 10, 2020
Heard on: Marketplace Morning Report
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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
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

Are states ready to roll out COVID-19 vaccines?

Claire Hannan, executive director of the nonprofit Association of Immunization Managers, which represents state health officials, said states have been making good progress in their preparations. And we could have several vaccines pretty soon. But states still need more funding, she said. Hannan doesn’t think a lack of additional funding would hold up distribution initially, but it could cause problems down the road. “It’s really worrisome that Congress may not pass funding or that there’s information circulating saying that states don’t need additional funding,” she said.

How is the service industry dealing with the return of coronavirus restrictions?

Without another round of something like the Paycheck Protection Program, which kept a lot of businesses afloat during the pandemic’s early stages, the outlook is bleak for places like restaurants. Some in the San Francisco Bay Area, for example, only got one week of indoor dining back before cases rose and restrictions went back into effect. Restaurant owners are revamping their business models in an effort to survive while waiting to see if they’ll be able to get more aid.

How are hospitals handling the nationwide surge in COVID-19 cases?

As the pandemic surges and more medical professionals themselves are coming down with COVID, nearly 1 in 5 hospitals in the country report having a critical shortage of staff, according to data from the Department of Health and Human Services. One of the knock-on effects of staff shortages is that people who have other medical needs are being asked to wait.

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