Third stimulus check prompts bill payments to increase by 30%
When stimulus payments hit bank accounts earlier this month, many Americans spent at least some of that money to pay their bills.
There was a 30% month-over-month increase in the number of payments made to pay household bills from March 17 to 21, according to the latest research from doxo bill payment service. During that same one-week period, the total amount paid was 37% higher compared to the same period in February.
“We’re getting a strong signal that generally the majority of people are responsible for these payments,” says Jim Kreyenhagen, vice president of marketing and consumer services at doxo.
Based on some of the early data regarding the number of checks sent, doxo calculates that around 62% of stimulus payments are spent on invoices. A significant portion of this money is used to pay off credit card debt.
During the week of March 17, there was a 29% increase in credit card payments compared to the same period in February, Doxo found. There was a 72% increase in the amount paid.
It’s no surprise that Americans have chosen to use their stimulus checks to pay their bills. “People are in debt on credit cards,” Kreyenhagen says. “We know it was piling up.”
In October, for example, 42% of people skipped one or more bills due to the effects of the Covid-19 pandemic and 30% have increased their credit card debt, doxo found.
Most likely, these are not new expenses that Americans are currently reimbursing. These payments took place immediately, indicating that people were paying off the existing debt that had accumulated.
In addition to an increase in credit card payments, doxo has seen a significant increase in the number of payments to utility companies, cable companies and mobile carriers, as well as outstanding loans such as mortgages and car loans.
So far, the IRS reports that more 127 million people received their third stimulus payments and another 30 million recipients of social security benefits should receive their checks no later than April 7.