42% of Americans Did Not Make a Large Purchase Last Year Due to COVID-19

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Around 42% of Americans did not make a large purchase last year due
to COVID-19, according to a new WalletHub credit
cards survey. The pandemic has left millions of people unemployed
globally and has forced people to re-evaluate how much they can
afford to spend.

Understanding consumers’ attitudes and choices regarding

large purchases
is particularly important at this time of the
year, with bills from holiday shopping coming due and Valentine’s
Day looming large. The definition of a ‘large’ purchase varies
across different demographics, but the biggest share of people, at
around 30%, consider it to be anything over $100.

“Due to the COVID-19 pandemic, around 42% of Americans have
not made a large purchase in the past year. This makes sense
considering the fact that the pandemic forced many people out of a
job, and the unemployment rate currently sits at 6.7%,” said
Jill Gonzalez, WalletHub analyst. “People in the
low- and middle-income brackets were prevented from making large
purchases at similar rates (around 49% and 46%, respectively),
while only 28% of high-income individuals had to forgo large
purchases.”

Key findings from the report include:

  • Maxing out is worrisome –91 Million Americans fear maxing
    out their credit cards on large purchases.
  • Men max out more – Women are about 7% less likely than men to
    have maxed out a card at least once.
  • Age shapes our definition of “large” – Millennials are
    almost twice as likely as Baby Boomers to choose “over $100” as
    the benchmark for a large purchase.
  • Spending permission needed – Nearly half of Americans have to
    check with someone else before making a large purchase.

“Approximately 91 million Americans are worried about maxing
out their credit card on a large purchase, so it’s a common
concern. It’s good to have a healthy amount of concern, though,
as the COVID-19 pandemic has put many people in a difficult
financial position and left millions unemployed. Before making
large purchases, people should consider how essential those
purchases are and whether they can really afford to spend that
much,” said Gonzalez.

“The key to worrying less about having enough spending power
to make a big purchase is to carefully manage your available
credit. It’s important to keep a close watch on your balance so
that you are always aware of what you have already spent. People
who do this will be less likely to max out their cards or overspend
in general. Another good habit is to pay your credit card bill
several times a month, especially when you are planning to make a
large purchase. That way, you will have more of your credit line
available at any given time. In addition, if you have a history of
paying your monthly credit card bill on time and using a small
percentage of your credit, you may want to ask your issuer for a
credit limit increase.”

The post
42% of Americans Did Not Make a Large Purchase Last Year Due to
COVID-19
appeared first on The Fintech Times.

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