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Financial reality looms as federal unemployment benefits near expiration

45% of unemployed Americans and 33% of employed Americans are worried about running out of emergency funds.


July 20, 2020

  • Many unemployed Americans are worried right now about running out of emergency funds (45%), more than double the concern that they will lose unemployment benefits if another stimulus package is not passed (21%).

  • 1 in 4 employed Americans (25%) are worried about not being able to earn the same income as they did before the coronavirus (COVID-19) pandemic because of social distancing rules.

  • Roughly a fifth of Americans with credit card debt (21%) say their credit card debt has been negatively impacted since the start of the coronavirus pandemic. This was higher among Latinx Americans (35%) than Black Americans (21%) and white Americans (18%).

More than 51 million Americans have filed for unemployment insurance since the first stay-at-home orders were issued in March (Department of Labor). To keep people afloat during this unprecedented economic shutdown, the CARES Act provides a $600 a week boost on top of state unemployment benefits. But that federal benefit is set to expire on July 31. 

Simultaneously, the number of COVID-19 infections and hospitalization have spiked across the country. As a result, many state governments have rolled back their reopening plans, increasing anxiety about the sustainability of an economic recovery despite some recent bright spots.

Amid these events, Tally commissioned an online survey between June 23 and 25, 2020, to find out what financial issues Americans are worried about right now. The survey was conducted online by The Harris Poll among 2,037 U.S. adults aged 18 or older.

Biggest worry: Emergency funds reaching emergency levels 

Asked what financial issues they are most worried about right now: 45% of unemployed Americans and 33% of employed Americans are worried about running out of emergency funds.

While it is a concern, fewer people are concerned about losing pandemic unemployment assistance (PUA). Only 21% of unemployed Americans are worried right now about losing unemployment benefits if another stimulus package is not passed. 

By comparison, employed Americans (28%) are much more likely than unemployed Americans (17%) to be worried about increasing their credit card debt. There are possible explanations: Those without jobs may be less worried because they are still receiving federal and state unemployment checks, some of which are higher than their usual paychecks. Meanwhile, those with jobs may be under-employed because they’ve lost wages, hours or customers, thereby earning less money and relying more on credit cards to fill the gap in cash flow.

Earning power is also a major concern right now. Businesses that stayed open or choose to reopen now have social distancing guidelines in place to protect their workers and customers. However, many of these businesses can no longer operate at their full capacity. As a result, they are serving fewer people and generating less revenue to hire back and pay their staff.

Employed Americans (25%) and unemployed Americans (22%) are almost equally worried about not being able to earn their pre-COVID-19 income because of social distancing rules. This is even higher among employed Americans with credit card debt who were negatively impacted by the coronavirus pandemic (40%). In this survey, negative impact includes things such as adding to existing debt, taking on new debt and defaulting on a payment, and getting a higher interest rate.

Emergency fund depletion likely to worsen credit card debt 

As the economic impact of the coronavirus pandemic continues, more Americans will likely rely on their emergency savings for living expenses. But as that dries up, many will likely resort to credit cards. Most Americans without jobs aren’t likely at this point yet since many are still getting their unemployment checks.

Only 22% of Americans are worried about increasing their credit card debt right now. Of the U.S. adults with credit card debt, 57% say there has been no impact on their credit card debt since the start of the coronavirus pandemic. Meanwhile, 22% report a positive impact (e.g., paying off debt, getting a lower interest rate, etc.) and 21% report a negative impact (e.g., increasing debt, defaulting on payment, etc.). 

This may be largely contributed to the many relief programs offered by lenders to delay payments or put accounts in forbearance. Conversely, Americans experiencing a positive effect on their financial debt may have been able to pay down their debt with the stimulus checks or by reducing their spending during the stay-at-home orders. According to the NY Fed’s Household Debt and Credit Report, credit card balances fell by $34 billion in the first three months of 2020.

So who is experiencing a negative impact on their debt? The financial impacts of the COVID-19 pandemic have disproportionately hurt those who make less money, are younger and are people of color.

Under the stay-at-home orders, Americans were forced to cut down their expenses since many businesses related to food, entertainment and travel were shut down. Some received a boost in income through the stimulus checks under the CARES Acts. Those with higher incomes were likely able to use the extra cash to pay down their debts, thereby seeing a positive impact on their credit card debt. The opposite was true for lower-income Americans who likely needed to rely on credit cards to cover basic living expenses.

Among those with credit card debt, Americans with an annual household income of less than $50,000 (25%) are more likely than those with an annual household income of $100,000 or more (19%) to say their credit card debt was impacted negatively since the start of the coronavirus pandemic.

By generation, Millennials (24-39 years old) and Gen Xers (40-55 years old) who have credit card debt are much more likely than Baby Boomers (56-74 years old) to have experienced a negative impact on their credit card debt since the start of the coronavirus pandemic (30%, 28%, 11%). Only 18% of Gen Zers (18-23 years old) with credit card debt report a similar negative impact. Though they are not any less likely to have credit cards, many Gen Zers are likely college students who moved back home when schools shut down and were able to cut their personal spending. Living costs were likely passed back onto their Gen X parents.

By race and ethnicity, most white Americans with credit card debt (62%) said the coronavirus had no impact on their credit card debt, whereas fewer Latinx (40%) and Black (53%) Americans said the same. Additionally, Latinx Americans with credit card debt (35%) are more likely than their Black (21%) and white (18%) American counterparts to say their credit card debt was negatively impacted by the coronavirus pandemic. 

Possible rise in personal loans

More than any of the other listed types of financial debt, Americans with personal loans (24%) report experiencing a negative impact to that debt during the coronavirus pandemic. This includes things like taking out a new personal loan, borrowing more in personal loans and defaulting on a personal loan.

This was especially high among Americans with credit card debt that was negatively impacted by the coronavirus pandemic: 60% say their personal loans were also negatively impacted. This suggests that new or more personal loans may have been taken out to consolidate credit card debt during the economic shutdown.

By comparison, fewer Americans with home loans (18%), car loans (20%), and student loans (20%) have experienced negative impacts on those types of debts during the coronavirus pandemic.

How to stay afloat through the next phase of COVID-19

The federal government’s financial support is coming to an end this month as many states roll back their reopening plans amid the anticipated second wave of the coronavirus. Financial worries will likely increase as more Americans become strapped for cash in the coming months. To help people figure out their best options, Tally’s personal finance expert, Bobbi Rebell CFP®, walks through different ways to borrow money (outside of applying for another high-interest credit card).

  • Loans with collateral:

    If you own a house or a car, you can use that asset to borrow money. However, this will require you to take on the risk of losing that asset if you can’t pay back the loan.

    For homeowners, you can access cash by taking on a second mortgage, home equity loan, cash-out refinance or home equity line of credit (HELOC). The first three will give you a lump sum of cash. With a home equity loan or a second mortgage, you’re taking out a one-time loan and then making payments to pay it back at a (usually) fixed rate. A cash-out refinance converts your original mortgage into a separate, larger one (what you still owe on your house plus the amount of money you are borrowing).

    HELOCs are essentially a revolving line of credit, but generally have more favorable rates than a credit card. However, you usually need to have HELOCs set up before you actually need it for an emergency. For some people, a reverse mortgage could be an option as well, though it is important to consult a financial advisor because the contracts can be complicated.

    You can also borrow against a car using a car-title loan. In some cases, you can use insurance as collateral and borrow against an insurance policy. Valuable personal assets can also be used as collateral for loans.


  • Loans without collateral:

    These are called unsecured personal loans because they do not require owning assets like a house or a car. Instead, they are given based on your creditworthiness, which includes your credit history, income and outstanding debts.

    Personal loans can be a reasonable resource in tough times and, let’s face it: The coronavirus pandemic is absolutely an unexpected hit to even the best financial plans. But be aware, personal loans can be more expensive and can hurt your credit score more than other types of loans.

    Here’s why:

    Earlier this year, FICO announced a big change to the way it calculates credit scores. Personal loans are now treated as a separate category from auto, home and student loans. This means personal loans are scrutinized much more closely, and short-term hacks like debt consolidation are effective. For instance, if you’re using a personal loan to pay down your credit card debt, the new scoring system checks if you’ve accumulated more credit card debt since doing so. If you have, you may see a drop in your credit score.

Survey method

This survey was conducted online within the United States by The Harris Poll on behalf of Tally from June 23-25, 2020, among 2,037 U.S. adults ages 18 and older, among whom 1,631 have credit card debt. 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 and subgroup sample sizes, please contact