Debt Survey:

The Biggest Financial Stressors for Americans With Debt During COVID-19

MoneyGeek’s survey explored Americans' attitudes about their debt and their most significant sources of financial stress during the COVID-19 pandemic.

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Living debt-free isn’t realistic for most Americans; almost everyone carries some form of debt. For many, this debt is a significant source of stress. MoneyGeek surveyed more than 1,200 Americans with debt to learn more about their most significant financial stressors and understand how they perceived and dealt with their finances.

MoneyGeek also reviewed data from the New York Federal Reserve’s Household Credit and Debt Report in a separate household debt analysis to explore the complex ways COVID-19 has affected debt in the United States.

Key Findings:
  • Finances were a source of stress for the majority (89%) of respondents.
  • Retirement (40%) and credit card debt (35%) were the two most common sources of stress reported.
  • Despite feeling stressed about their finances, nearly one-third (32%) of survey respondents felt they were better off financially during the pandemic.
  • More than half (52%) of respondents reported feeling optimistic or very optimistic about the future of their finances.

The Majority of Americans Are Stressed About Their Finances

MoneyGeek’s survey found that 89% of respondents — all of which had debt — were stressed about their financial situation.

Debt can significantly impact mental health, and with the average American holding $53,897 in personal debt, it’s no wonder that so many people are anxious about their finances. It’s worth noting that debt has increased since the start of the COVID-19 pandemic — according to MoneyGeek’s debt analysis, the average household debt went up 3% since the first quarter in 2020.

We asked participants to rate the most significant sources of money-related stress to determine the biggest sources of their financial concerns amid COVID-19.

Saving enough for retirement and managing credit card debt were the two most common stressors for all participants. However, our results also showed some fundamental differences in sources of stress based on income and age.

Differences in Stress by Income

MoneyGeeks’ survey found significant differences in stress based on income.

For example, individuals who made $34,999 or less a year were most stressed about having a stable income and affording day-to-day expenses. Those who had annual incomes of $100,000 or more reported feeling most concerned about their retirement savings.

Sources of Stress by Income Range
Income Range
Most Stressful
Second-Most Stressful

Less than $20,000

Lack of stable income

Managing credit card debt

$20,000 to $34,999

Affording day-to-day expenses

Lack of stable income

$35,000 to $49,999

Preparing or saving enough for retirement

Managing credit card debt

$50,000 to $74,999

Managing credit card debt

Preparing or saving enough for retirement

$75,000 to $99,999

Preparing or saving enough for retirement

Managing credit card debt

$100,000 to $149,999

Preparing or saving enough for retirement

Managing credit card debt

$150,000 or More

Preparing or saving enough for retirement

Monthly mortgage or rent payments

Differences in Stress by Age

Survey results also revealed significant generational differences in sources of financial stress.

Gen Z adults ages 18–24 and millennials ages 25–34 reported feeling most concerned about student debt — nearly 25% of Gen Z respondents and over 20% of millennials cited student loans as the financial factor in their lives that caused them the most stress.

MoneyGeek’s debt analysis found that student loan debt doubled since the end of the Great Recession in 2010. Currently, the average American household has more than $58,000 in student loan debt — that’s over $1.5 trillion owed across the country.

Despite Stress, Americans Feel Good About Their Financial Futures

More than half (52%) of respondents in MoneyGeek’s survey reported being optimistic or very optimistic about their financial futures. These results fell in line with the way respondents perceived their current financial situations: Nearly one-third (32%) reported feeling better or much better off financially than they were six months ago, and just 17% reported feeling worse or much worse off.

Just 17% of respondents reported being pessimistic or very pessimistic about their future finances. The remaining 31% were neither optimistic nor pessimistic.

Like sources of financial stress, these attitudes differed by age group. Millennials had the most positive outlook, with approximately 58% saying they felt optimistic or very optimistic about their financial futures.

Adults ages 45–54 — also known as Gen X — were less hopeful, with just 44% saying they felt optimistic or very optimistic.

Older adults were more likely to express pessimism: 21% of respondents ages 55 to 64 reported feeling pessimistic or very pessimistic about their financial futures.

How Americans Are Coping With Their Financial Situations

MoneyGeek’s survey revealed that many consumers are taking action to manage their finances.

Over one-third (36%) of respondents reported paying down their credit card balances in the past six months. This result is in line with insights from MoneyGeek’s debt analysis, which found that in total, Americans paid down $110 billion in credit card debt over the last six months, an average of $2,049 per household.

Approximately 34% of survey respondents said they cut down on their expenses to improve their financial situation.

Nearly one-quarter (24%) searched for or took on additional work to increase their earnings.

More than one-quarter (27%) used savings or emergency funds to cover expenses, and 9% reported contacting creditors to seek debt relief.

Special Insight: How Americans Are Using Their Tax Credits

Because the expanded child tax credit was a key federal measure in COVID-19 economic recovery, MoneyGeek was also interested in seeing how it impacted Americans' finances.

The IRS estimates that child tax credit payments cover nearly 90% of children in the United States. Approximately 40% of respondents have children under 18, a number consistent with the U.S. Census estimate of the percentage of American households with children (40%).

Married couples earning up to $150,000 in adjusted gross income and single-parent families earning up to $112,500 qualify for the expanded child tax credit as part of the American Rescue Plan that became law in March 2021. This legislation increased the child tax credit from $2,000 to $3,000–$3,600 per child for qualifying families.

However, 10% of respondents in MoneyGeek’s survey indicated they were unsure if they were eligible or not. Another 29% reported being sure they were eligible for the tax credits.

As part of our survey, MoneyGeek explored how eligible families planned to use their child tax credit. Over 40% of respondents planned to spend it on current living expenses, and 38% said they would spend it on childcare expenses.

Expert Spotlight: How COVID-19 Has Impacted Debt & Financial Attitudes

MoneyGeek consulted consumer finance experts to get their perspectives on how the COVID-19 pandemic affected spending behaviors and the average American’s relationship with their finances.

How have Americans changed their spending and credit-seeking habits during the pandemic? What are the most important factors in those changes?

Michael Bovee:

The pandemic exposed how consumers — already a missed paycheck or three from insurmountable financial setbacks — lack emergency funds to weather a shortfall. I am not just talking about lower-income households, but middle-class households, too. I talk with people who hit the debt wall daily. I immediately work to understand what their cash flow is like now — and on a forward-looking basis — and also what savings they have to help address immediate concerns (or ones that inevitably pop up while working on their debts). Up until the pandemic, it was not common to find much savings or an emergency fund to work with in my early discussions with people. Today I am talking to more and more people who have their emergency fund as a line item on their monthly cash flow before we connect. They have problem debts to contend with but maintain a hyper-awareness of not getting caught without several months of cash saved up to weather the next setback. I am now able to successfully encourage placing money in an emergency fund with nearly universal understanding of the importance. Before the pandemic the priority of building an emergency fund was nearly last on the list (if it made the list).

Lisa Fischer:

Despite the economic strain and uncertainty brought on by the pandemic, many consumers exhibited more responsible spending and credit habits than ever before. COVID-19 stimulus and economic relief funds offered a uniquely helpful source for consumers behind on payments to gain a leg up, which helped some repair their credit. For example, we saw many of our customers use these funds to pay off outstanding bills and debt and move further along in the journey to turn their finances around.

Renaud Laplanche:

We observed an initial pull-back in credit demand and increase in prepayments in the early days of the pandemic as consumers spent less and benefited from government stimulus checks. Then we saw a steep reversal in the last six months as the economy re-opened, consumption recovered and demand for credit increased back to pre-COVID levels.

Methodology

MoneyGeek’s survey was fielded via SurveyMonkey on July 27th, 2021 and included 1,228 responses from individuals who reported having household debt of any kind.

About the Author


expert-profile

Deb Gordon is author of The Health Care Consumer’s Manifesto (Praeger 2020), a book about shopping for health care, based on consumer research she conducted as a senior fellow in the Harvard Kennedy School’s Mossavar-Rahmani Center for Business and Government between 2017 and 2019. Her research and writing have been published in JAMA Network Open, the Harvard Business Review blog, USA Today, RealClear Politics, TheHill, and Managed Care Magazine. Deb previously held health care executive roles in health insurance and health care technology services. Deb is an Aspen Institute Health Innovators Fellow, and an Eisenhower Fellow, for which she traveled to Australia, New Zealand, and Singapore to explore the role of consumers in high-performing health systems. She was a 2011 Boston Business Journal 40-under-40 honoree, and a volunteer in MIT’s Delta V start-up accelerator, the Fierce Healthcare Innovation Awards, and in various mentorship programs. She earned a BA in bioethics from Brown University, and an MBA with distinction from Harvard Business School.


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