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More Americans Pay Rent On Credit Cards As Lawmakers Fail To Pass Relief Bill

Nov 30, 2020
Originally published on November 30, 2020 5:20 pm

With their savings running out, many Americans are being forced to use credit cards to pay for bills they can't afford — even their rent. Housing experts and economists say this is a blinking-red warning light that without more relief from Congress, the economy is headed for even more serious trouble.

There's been as much as a 70% percent increase from last year in people paying rent on a credit card, according to an analysis by the Federal Reserve Bank of Philadelphia.

"If you're putting your rent payments on to a credit card, that shows you're really at risk of eviction," says Shamus Roller, executive director of the nonprofit National Housing Law Project. "That means you've run out of savings; you've probably run out of calls to family members to get them to loan you money."

Marine Madesclaire could be faced with the choice of paying her rent on credit, too.

Before the pandemic hit, she felt like she was hitting her stride. The 29-year-old Los Angeles actor was doing lots of auditions and managing to land at least some quick appearances in Hollywood films.

To pay the bills, she had a gig doing modeling work at Las Vegas trade shows. "You go to the conventions, and you stand and look pretty next to, insert product," she says. "And it paid very, very well. I had been traveling."

Marine Madesclaire at a low-wage job she's taken to try to survive. She's faced long delays in getting unemployment benefits and is sinking deeper into credit card debt.
Marine Madesclaire

But all that stopped in March. Since then, Madesclaire has been among millions of unlucky people who've faced long delays getting unemployment benefits. It appears she should qualify. But it's been more than six months, and she still hasn't received any unemployment money.

"It's been so long that I don't cry about it anymore," she says. "I used to, like, have full-blown meltdowns about it."

She depleted her savings just to eat and pay bills. She's run up more than $10,000 in credit card debt.

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Madesclaire has asked her card issuer Chase for help. But she says except for waiving some late fees, the bank hasn't done much to help her. She says the 16% interest is sinking her even deeper into debt.

"They're charging me interest and late fees," she says. "And up until like a week ago, they also were calling me like five times a day until I told them to please stop."

Chase said in a statement to NPR that it has enrolled many customer accounts in "payment assistance" plans. The bank says it doesn't charge them late fees, but it does keep charging interest.

Madesclaire was finally able to find a low-wage job at a computer repair store. But while that just barely covers her monthly bills, she's still four months behind on her rent.

A state eviction moratorium in California will protect her until the end of January, or she says she would have paid her rent on a credit card, too.

"If the choice is debt or homelessness," she says, "I'm going to go in as much debt as I can."

Some people just pay that way for convenience. But for many others it's an act of desperation.

The National Housing Law Project's Roller notes that there's a federal order from the Centers for Disease Control and Prevention aimed at preventing evictions. But it's not an outright ban, and many people don't know the order exists or how it can protect them. So he says it's not working very well. There have already been thousands of evictions in Houston, Memphis, Tenn., Richmond, Va., Columbus, Ohio, and other areas, Roller says.

"It's bad for public health, it's bad for the families that are involved," he says. "It's bad for all of us as a country."

It could also be just the tip of the iceberg. And it's not just housing rights groups that are worried.

Mark Zandi, chief economist of Moody's Analytics, estimates about 10 million Americans owe back rent. And without another robust relief bill from Congress, he expects to see "mass eviction" starting early next year.

"Just think about that for a second," he says. "This is all going to be happening in the dead of winter, in the middle of a raging pandemic. I mean, I can't even construct a darker scenario."

Zandi says even if they don't lose their housing, millions of other Americans will fall deeper into debt. And he says so many people continuing to suffer financially will hurt the whole economy.

"I think odds are very high that we're going to go back into recession," he says, "if lawmakers can't get it together early next year and pass a fiscal rescue package."

Zandi says, "It's absolutely critical that lawmakers step up."

As part of the federal aid, he and Roller would both like to see an effective nationwide eviction moratorium, combined with money to pay landlords the rent they are owed to keep them from going under, too.

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Many Americans are being forced to pay their rent and other bills on credit cards because they've lost income in the pandemic and are falling deeper into debt. As NPR's Chris Arnold reports, housing experts and economists say that's a blinking-red warning light that without more relief from Congress, the economy is headed for trouble.

CHRIS ARNOLD, BYLINE: Before the pandemic hit, Marine Madesclaire felt like she was hitting her stride. She's an actor in LA. She was 29, doing lots of auditions and managing to land at least some quick appearances in Hollywood films. To pay the bills, she had a gig doing modeling work at Las Vegas trade shows.

MARINE MADESCLAIRE: You go to the conventions, and you stand and look pretty next to insert product. And it paid very, very well. I had been traveling.

ARNOLD: But all that stopped in March. And since then, Madesclaire has been among millions of unlucky people who faced long delays getting unemployment benefits. It appears she should qualify, but it's been more than six months, and she still hasn't gotten any unemployment money.

MADESCLAIRE: It's been so long that I don't cry about it anymore. I used to, like, have full-blown meltdowns about it.

ARNOLD: Meltdowns as she depleted her savings just to eat and pay bills. She's run up more than $10,000 in credit card debt. She's asked the card issuer Chase for help, but she says except for waiving a few late fees, she hasn't really gotten much help. The company is charging her 16% interest, which is sinking her even deeper into debt.

MADESCLAIRE: They're charging me interest and late fees. And up until, like, a week ago, they also were calling me, like, five times a day until I told them to please stop.

ARNOLD: Chase said in a statement that it has enrolled many customers in payment assistance plans. The bank says it doesn't charge them late fees, but it does keep charging interest. Madesclaire was finally able to find a low-wage job at a computer repair store. But while that just barely covers her monthly bills, she's four months behind on her rent. She said there's an eviction moratorium in California that protects her until the end of January, or she would've paid her rent on a credit card, too.

MADESCLAIRE: If the choice is debt or homelessness, I'm going to go in as much debt as I can.

ARNOLD: And many people are doing just that. According to an analysis by the Federal Reserve Bank of Philadelphia, compared to last year, there's been about a 70% increase in people paying rent on a credit card. Now, some people, of course, just pay that way for convenience. But for a lot of others...

SHAMUS ROLLER: If you're putting your rent payments onto a credit card, that shows you're really at risk of eviction.

ARNOLD: Shamus Roller heads up the nonprofit National Housing Law Project.

ROLLER: That means you're - you've run out of your savings. You've probably run out of the calls that you can make to family members to get them to loan you money.

ARNOLD: He says that nationwide, there's a federal order aimed at preventing evictions, but it's not an outright ban. And many people don't know that it exists or how it can protect them. So he says it's not working very well. He says already, we've seen thousands of evictions in Houston; Memphis; Richmond, Va.; Columbus, Ohio. The list goes on.

ROLLER: That just - it's bad for public health. It's bad for the families that are involved. It's bad for all of us as a country.

ARNOLD: It could also just be the tip of the iceberg. And it's not just housing rights groups that are worried. Mark Zandi is the chief economist of Moody's Analytics. He estimates about 10 million Americans owe back rent. And without another robust relief bill from Congress...

MARK ZANDI: I think there's going to be mass eviction, you know, starting early next year. Just think about that for a second. This is all going to be happening in the dead of winter, in the middle of a raging pandemic. I mean, I can't even construct a darker scenario.

ARNOLD: And Zandi says millions of other people will just fall deeper into debt, and all that could tip the economy back into recession. So he says it's critical that lawmakers pass another big relief bill. He and Roller would both like to see an effective nationwide eviction moratorium and money to pay landlords the rent that they're owed to keep them from going under too.

Chris Arnold, NPR News.

(SOUNDBITE OF THE SHINS SONG, "THE FEAR") Transcript provided by NPR, Copyright NPR.