It appears that the monumental effort to send out nearly one hundred thirty million $1,400 coronavirus relief checks under the $1.9 trillion American Rescue Plan couldn’t come at a better time for many financially struggling Americans.
According to the latest research from bill pay service doxo, there was a 30 percent month-over-month rise in the number of payments made to pay household bills from March 17 to March 21. During that same week, the total amount paid was found to be 37 percent higher compared to the same period in February.
In all, the Seattle-based company calculated that roughly 62 percent of stimulus checks are being spent on bills, such as those to utility companies and mobile phone carriers, with a large portion of that focused on paying off outstanding credit card debt. It further revealed that during the week of March 17, there was a 29 percent increase in credit card payments and a 72 percent surge in the amount paid compared to the same period in February.
Back in October, doxo discovered that 42 percent of Americans skipped at least one bill because of the economic effects of the ongoing coronavirus pandemic. Moreover, 30 percent tacked on credit card debt.
“Our data shows that more than half of all Americans have seen a reduction in income as a result of the COVID-19 crisis. It is therefore no surprise that many have also struggled to pay their bills over the last seven months since the pandemic started,” Jim Kreyenhagen, vice president of Marketing and Consumer Services at doxo, said in a statement.
“Further, with no end in sight for economic recovery, we’re seeing that consumers remain not only worried about their ongoing ability to pay bills, but how the pandemic will impact their future financial health.”
According to another recent research from the financial services firm TransUnion, four in ten Americans are still continuing to experience a loss of income compared to before the pandemic started more than a year ago.
“38 percent of U.S. consumers said their household income remains negatively impacted due to the COVID-19 pandemic. … While 5 percent of the population has thrived during the pandemic—reporting no income drop and better than planned finances—another 3 percent are devastated by reduced income and don’t think they’ll ever recover,” the report wrote.
“For those whose income has been reduced, 8 percent are resilient saying their finances have fully recovered, and another 27 percent are hopeful saying their finances will recover. Thirty-five percent of all consumers report their financial situation is stable.”
It also found that those who are most negatively affected by the pandemic will use the cash for basic living expenses, such as groceries, utilities, and the mortgage or rent.
Roughly one in five adults are “in limbo,” which TransUnion defines as those who have lost income and are unsure how their finances will recover—if at all.
Ethen Kim Lieser is a Minneapolis-based Science and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.