75% of Americans have missed credit card payments due to Covid-19 – Forbes Advisor

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A new survey for Forbes Advisor by OnePoll asked Americans about their credit card habits, frustrations and preferences. While some behaviors have remained exactly the same since the start of the pandemic, a whopping three-quarters of respondents said they had trouble with on-time payments at least once in the past two years.

Cardholders still rely on cards for many of the same reasons they always do: to build credit, earn rewards, and access easy financing. However, the effects of the pandemic on credit cannot be ignored.

Here’s how American attitudes and behavior toward credit cards lean today.

Find the best credit cards for 2022

No credit card is the best option for every family, every purchase or every budget. We have selected the best credit cards so as to be the most useful for the greatest number of readers.

Covid-19 caused cardholders to miss payments

Naturally, Covid-19 has added pressure on the personal finances of many households. In fact, more than three-quarters of respondents admitted to making a late credit card payment during the pandemic or missing a payment entirely.

While some of those payment issues were due to old-fashioned oversights (something you could relate to, given the distractions and stresses of the past two years), others were more direct financial pressure. A whopping 43% of respondents missed or paid late because they needed that money for essentials, while a further 27% were unable to pay due to unforeseen expenses.

Obviously, the best case scenario is to make your payment on time each month, because payment history is the most important factor in your credit score. If you absolutely can’t pay, your best option is to call your card issuer before the due date to explain your difficulties and see if you can work out a personalized temporary payment plan.

Most cardholders don’t know all the benefits of their card

At this point, we’re well into 2022, but it’s time to add another resolution to your list. If you’re one of the many Americans who aren’t aware of the benefits included on their specific card, you’re not alone. According to our survey, only 29% of cardholders strongly agree that they understand the benefits of their card.

Credit cards often advertise their included benefits online, but many of the smaller or lesser-known benefits change frequently. Unless you’ve verified your account recently, chances are you’re getting benefits you didn’t even know existed.

Many cards include a benefits guide somewhere in your online account, often available as a PDF download. Alternatively, you can message or call Account Services to request a copy. Twenty minutes of reading can get you up to speed on things like travel protections, cell phone insurance, and purchase protection, all of which are relatively common extras.

Card benefits can be worth a substantial amount of money, especially on premium cards, so it’s worth researching this information. In some cases, you may even find unusual extras offered at no additional cost.

Interest rates are a constant source of frustration, but Americans still rely on the cards

Customers who are unable to pay their bill in full will be hit with interest charges on their statement balance, often at rates between 15% and 25% per annum. If that sounds high, join the club. Forty percent of cardholders are dissatisfied with interest rates according to this survey, making it the number one source of frustration when it comes to credit cards.

For cardholders with no balance, interest rates make no difference. However, these customers are in the minority. Nearly 90% of survey respondents wear a balance occasionally or more often, with 41% wearing a balance every month.

Interest charges can add up quickly, so if you can’t pay your bills in full, it’s time to consider other options. Credit cards with an introductory APR of 0% can be a useful tool for someone who only anticipates a one-time need to carry a balance and has a plan to pay their bill before the end of the period. of introduction. If you don’t qualify for one of these new cards, you may be able to negotiate a lower rate directly with your current card issuer.

(Most) Customers Prefer Travel Rewards Over Cash Back

Despite the fact that travel always comes with challenges and restrictions, most cardholders still prefer to earn travel rewards in one form or another. According to our survey, hotel points are the most popular type of reward, chosen by 28% of respondents, followed by transferable travel rewards (23%), airline miles (21%) and general travel rewards ( 7%). In total, 79% of respondents chose some sort of travel rewards.

The trend towards hotel points in particular could tell a bigger story. Unlike airline miles or transferable awards, hotel points are simple to redeem. There are usually no blackout dates and prices are displayed prominently on hotel websites. Additionally, major hotel programs have properties all over the world for easy buyout. For those who have specialized in staycations over the past couple of years, Hotel Points was a natural fit.

Interestingly, zooming in on respondents aged 58-76 leads to a different story; These respondents overwhelmingly prefer cash back, with 70% choosing this simple reward as their preference. As always, cash offers simplicity and flexibility and there are currently several rewarding cash back credit cards.

Men and women redeem their rewards differently

How often do you cash out your rewards? According to our survey, if you’re a man, you’re likely to use them at least once every six months (79% of respondents). If you are a woman, it is more likely to be six months to a year (61%).

There are many reasons to redeem rewards at different rates. Someone who saves for a more expensive reward will naturally need more time to accumulate enough points, while someone who prefers multiple rewards at a lower cost may redeem more frequently. Win rates are also important, with cardholders hitting their different thresholds at different times, either because they spend more or because they win at a higher multiplier.

One thing is certain: you should not accumulate points. Bank Points, Airline Miles and Hotel Points are all subject to devaluation and some rewards may be waived altogether. Believe it or not, you don’t have much control over the miles and points you’ve earned. Even with cash, there is an opportunity cost to holding it as a card reward instead of transferring it to your bank to earn interest or be invested.

Sure, save up for your dream reward, but it’s not a good idea to keep points for no specific use. If you really don’t know what to do with your points, you might want to consider earning another type of reward.

Find the best credit cards for 2022

No credit card is the best option for every family, every purchase or every budget. We have selected the best credit cards so as to be the most useful for the greatest number of readers.

Conclusion

This survey touched on a number of different aspects and attitudes towards credit cards to give us real-time insight into cardholder behavior. Although this research covered a wide range of topics, it confirmed that many cardholders rely on credit cards as a source of funding, especially in times of need or hardship. He also confirmed that rewards are a strong driver for choosing a specific card and that travel, although adapted to today’s realities, is still a clear winner.

This online survey of 2,000 US adults was commissioned by Forbes Advisor and conducted by market research firm OnePoll in accordance with the Market Research Society’s Code of Conduct. Data was collected between February 4 and February 7, 2022. Margin of error is +/- 2.2 points with 95% confidence. This survey was overseen by the OnePoll research team, a member of the MRS and a member of the American Association for Public Opinion Research (AAPOR). For full survey methodology, including geographic and demographic sample sizes, contact [email protected].

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