For many consumers, the pandemic has unleashed a cash flow crisis, with nearly 27% reporting they are currently behind on at least one bill.
A survey by electronic payment services provider ACI Worldwide provided a snapshot of the financial picture of American households amidst the COVID-19 outbreak, and for some, the outlook was not so good.
Younger consumers appear to be feeling the biggest cash crunch, as 40% of respondents between 18-34 said they were behind on at least one bill. Nearly half of consumers in that age group have reached out to creditors to make payment arrangements compared to 27% of all consumers.
Housing the top priority
When facing a cash shortage, bills tend to get prioritized by which is the most important. For all age groups, housing was the top priority, as 81% of respondents named their mortgage as a top priority and 78% cited rent. Among all consumers, utilities were the next big concern, with 23% calling them a top priority. Fifteen percent named tax bills a priority and 10% said their car lease or loan was a top concern. The bills consumers were the least concerned about were their cell phone bills, named a priority by 5% and cable and internet bills, cited by only 3%.
Generations also had different takes on which bills they considered most important.
Among respondents between the ages of 18-34, housing was followed by medical bills, utilities, credit cards and their car lease or loan.
Among consumers over 35, utilities and tax bills were the No. 2 and No. 3 priorities, respectively. Those priorities were followed by auto loans and credit cards among respondents between 35-54 and credit cards and auto insurance among respondents 55 and over.
In some cases, bills may be higher than normal because of the coronavirus. For example, an earlier survey found that 1 in 5 households have seen a rise in energy bills during the pandemic.
Outlook varies by age
Many consumers don’t see a quick solution to their money woes, as some believe it will take time to return to normal spending patterns. Among respondents to the ACI Worldwide survey, 43% said they will need at least four to 12 months to catch up on late payments. Also, 15% estimate that it will take them more than a year to catch up.
However, older consumers were the most pessimistic. Baby boomers expected recovery to take, on average, one to two years. In comparison, respondents from Generation X were most likely to say it would take four to 12 months to catch up on bills and millennials and Generation Z respondents were most likely to say they would catch up within three months.
Where consumers lived also seemed to play a role in their level of optimism. Those in the Midwest expected recovery to take longer, with nearly 30% saying it would take one to two years. In contrast, 53% of respondents from the Northeast expected it would take four to 12 months to catch up on bills and nearly 50% of respondents in the West said they would be able to catch up within three months.
Methodology: ACI Worldwide commissioned YouGov to survey 1,384 adults between April 29-30. ACI Worldwide defines older Gen Zers and millennials as those between 18-34, Generation Xers as those between 35-54 and baby boomers as those 55 and over.