Question

Summarize from any article related to household debt about credit card debt & personal loan that affected by the Covid-19 crisis.

Answer 1

Answer to question

The COVID-19 pandemic represents an unprecedented shock to households and policymakers. As policymakers implement new legislation and lending facilities to combat the economic downturn, there are many direct and indirect channels through which COVID-19 can affect households in the United States.

Some direct channels include loss of employment because of the shuttering of the economy, mobility restrictions and adverse health outcomes relating to the pandemic. These direct effects of the pandemic harm consumers through loss of income, which limits their ability to pay off existing debts and thus may place them in severe financial stress.

Loss of income and uncertainty about the economy can quickly alter a consumer's spending behavior, as well as how they interact with debt and credit. To see what effects the outbreak has had thus far, we took a look at several factors and how they've changed over the course of just a few months.

Quick analysis Since the World Health Organization declared the COVID-19 outbreak a pandemic in mid-March, the credit card sector has not yet seen the true economic impacts of the virus. At the start of this year the industry was poised for another strong quarter as there was record growth in originations and consumer access to credit. Along with this growth, delinquencies remained relatively stable – in part due to accounts moving into deferment as a result of new COVID-19 legislation. However with rising unemployment and growing consumer debt, we expect lenders to recalibrate their underwriting strategies to mitigate risk.