The Burden Of Debt

Is There Relief From Our Current Financial Worries?

NFCC and Discover unveil how they are addressing the financial vulnerabilities revealed in the 2020 Financial Literacy Survey

Survey reveals that more Americans carry credit card debt while others express worries about lack of savings on the eve of a global pandemic. Access the full study here.

(Washington, DC) As millions of Americans face the financial fallout surrounding COVID-19, they are turning to services and companies to provide relief. The National Foundation for Credit Counseling®(NFCC®) is one organization offering support and today released the results of the 2020 Financial Literacy Survey conducted by The Harris Poll among 2,004 U.S. adults ages 18+, which offers a unique snapshot of our state of financial health on the eve of the coronavirus pandemic known as COVID-19.

Sponsored by Discover, the survey found encouraging news regarding savings and awareness of the overall benefit of receiving expert financial guidance. Conversely, the results showed an increase in Americans who carry credit card debt from month to month as compared to the past eight years, as well as concern among a sizable minority about long-term financial stability, including retirement savings.

On a broad scale, in response to COVID-19, NFCC is offering a program that will assist people with special arrangements for their credit card debt and other unsecured debt while also providing access to free budget and financial guidance. Discover is also contributing an array of consumer solutions across all of their products that may include assistance related to payments, fees and interest.

“As the coronavirus pandemic continues to impact lives in so many different ways, the economic disruption has placed millions of financially vulnerable people in danger of the most severe hardship,” said NFCC President and CEO Rebecca Steele. “For those in need of trusted financial guidance during these difficult times, the NFCC has led an industry-wide response to ensure that people have access to safe and transparent solutions for their debt management challenges during the COVID-19 crisis.”

Seeking Financial Advice

As recent economic disruption has forced many households to make difficult budget decisions, it is reassuring that most U.S. adults (78%) agree that, considering what they already know about personal finance, they could still benefit from advice and answers to everyday financial questions from a professional. Additionally, if they were having financial problems related to debt, one-quarter of adults (25%), or over 62 million Americans i, indicate they would reach out to a professional non-profit credit counseling agency for assistance.

Debt Repayment Challenges

When it comes to the use of credit cards, 62% of people have carried credit card debt in the last 12 months. Nearly 6 in 10 (58%) find it difficult to minimize their debt, primarily due to unexpected financial emergencies (19%) or reduction of income (19%). More than one in four (27%) admit they do not pay all of their bills on time, which is the highest proportion of those reporting past due payments since 2012. If they were behind on their debt, U.S. adults would most commonly prefer to be contacted by the debtor via email (29%) or phone call (22%), and more than half (52%) would prefer this communication to occur on a workday.

Financial Concerns

Although the majority of adults have non-retirement savings (70%) and save a portion of their household’s income each year for retirement (70%), when asked what areas of personal finance worry them most, the top response among U.S. adults continues to be retiring without having enough money set aside (13%), followed closely by insufficient “rainy day” savings for an emergency (12%). Notably, while these are the most common responses year over year, the proportions are at low points following highs of 18% and 16%, respectively, in 2017.

Excerpts from the 2020 NFCC/Harris Poll Consumer Financial Literacy Survey – Key Findings

Budget, Spending, and Saving
In 2020, nearly half of U.S. adults (47%) say they have a budget and keep close track of how much they spend on such things as food, housing, and entertainment.

  • Over half of U.S. adults (52%) are spending the same as last year, while more than one-quarter are now spending more (27%) and fewer (22%) say they are spending less than before. Younger adults ages 18-34 are more likely than those ages 35+ to be spending more this year (41% ages 18-34 vs. 25% ages 35-44, 21% ages 45-54, 18% ages 55-64, and 19% ages 65+).
  • Roughly the same proportion (51%) say they are saving the same as last year, while the proportion who say they are saving more (32%) greatly exceeds those who are saving less (18%). Seven in 10 U.S. adults (70%) have non-retirement savings, a proportion that has held mostly consistent since 2016, with the majority of adults (63%) saving or investing their money in a savings account.
  • Men (80%) are more likely than women (61%) to have non-retirement savings.
  • Men are also more likely than women to have savings/investments overall (89% vs. 76%), and among those who have any savings/investments: Men are more likely than women to save/invest their money in a 401k plan, IRA, or other investments/mutual funds (74% vs. 60%). o Adults ages 65+ are more likely than those ages 18-64 to use a savings account (89% ages 65+ vs. 73% ages 18-34, 70% ages 35-44, 76% ages 45-54, and 74% ages 55-64). Further, the majority of U.S. adults (88%) are at least somewhat confident in their ability to meet their future financial obligations, with nearly half (46%) saying they are extremely or very confident.
  • Men are more likely than women to say they are extremely or very confident (53% vs. 40%). Retirement When it comes to retirement savings, 7 in 10 U.S. adults (70%) say they save some portion of their household’s annual income for retirement, which is significantly higher than previous years. Further, more than one in ten (11%) now say they save more than 20% of their household’s income every year for retirement, a proportion that has risen slightly each year since 2017 (10% in 2019, 8% in 2018, and 7% in 2017).
  • Men are more likely than women to be saving for retirement (81% vs. 61%). Perhaps unsurprisingly since U.S. adults are more likely to be saving at least something for retirement in 2020, they are also more likely to feel confident they are saving enough for retirement. Over half (56%) say they feel very or somewhat confident that they are saving enough. • More than 1 in 5 U.S. adults (22%) feel very confident – but a similar proportion (23%) are not confident at all that they are saving enough.
  • Men are more likely than women to feel confident in their retirement savings (63% vs. 50%). Yet, when asked what areas of personal finance worry them most, the top response among U.S. adults continues to be retiring without having enough money set aside (13%), followed closely by insufficient “rainy day” savings (12%). Notably, while these are the most common responses year over year, the proportions are at low points following highs of 18% and 16%, respectively, in 2017.
NFCC is offering a program that will assist people with special arrangements for their credit card debt and other unsecured debt while also providing access to free budget and financial guidance...

Homeownership
Considering the current housing market, over half of U.S. adults (57%) feel buying is more affordable, while one-quarter (25%) believe renting is more affordable and another 18% are not at all sure. While the proportion of those saying renting is more affordable has held mostly consistent from 2019 (26%), more U.S. adults say buying is more affordable in 2020 (compared to 50% in 2019) while those who are not at all sure has gone down (compared to 24% in 2019).

  • Men are more likely than women to say buying is more affordable (62% vs. 53%).
  • Adults with household income over $50K are more likely than those with household income less than $50K to feel buying is more affordable (56% with household income $50K-$74.9K, 64% with household income $75K-$99.9K, and 74% with household income $100K+ vs. 38% with household income less than $50K). Most U.S. adults (82%) have tried to purchase their own home, and of those, more than half (56%) have faced barriers.

 

  • Hispanic adults are the most likely to have faced barriers to homeownership as compared to their Black/African-American and White counterparts (68% vs. 47% and 43%, respectively). o Black/African-American and Hispanic adults are 2-3 times more likely than White adults to have encountered housing discrimination (10% and 8% vs. 3%, respectively).
  • Younger adults ages 18-34 who have tried to purchase their own home are most likely to have experienced barriers, particularly little or no credit history and lack of understanding of the home buying process.
  • Adults who have tried to purchase their own home residing in the Northeast are the least likely to have faced barriers to doing so (41%).

Access the complete survey here.

About the Survey
The 2020 Financial Literacy Survey was conducted online within the United States by The Harris Poll on behalf of the National Foundation for Credit Counseling and Discover Financial Services between March 9th and March 13th, 2020 among 2,004 U.S. adults ages 18+. This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated. For complete survey methodology, including weighting variables, please contact [email protected]
About NFCC
Founded in 1951, the National Foundation for Credit Counseling® (NFCC®) is the nation’s first and largest nonprofit dedicated to improving people’s financial well-being. With nearly 600 member offices serving 50 states and Puerto Rico, our NFCC Certified Credit Counselors are financial advocates, empowering millions of consumers to take charge of their finances through one-on-one financial reviews that address credit card debt, student loans, housing decisions, and overall money management. Make one of the best financial decisions of your life. For expert guidance and advice, call (800) 388-2227 or visit www.nfcc.org today.
About Discover
Discover Financial Services (NYSE: DFS) is a digital banking and payment services company with one of the most recognized brands in U.S. financial services. Since its inception in 1986, the company has become one of the largest card issuers in the United States. The company issues the Discover card, America’s cash rewards pioneer, and offers private student loans, personal loans, home loans, checking and savings accounts and certificates of deposit through its banking business. It operates the Discover Global Network comprised of Discover Network, with millions of merchant and cash access locations; PULSE, one of the nation’s leading ATM/debit networks; and Diners Club International, a global payments network with acceptance around the world. For more information, visit www.discover.com/company.
[i] Calculation based on U.S. Census Bureau’s 2018 Current Population Survey (CPS), which estimates there are 249.19 million adults ages 18+ residing in the United States: 249.19M x 0.25 = 62.3M.