by David M. Higgins II, Publisher
The U.S. unemployment rate has improved but is still around 11%, while the Maryland unemployment has dropped to 9.9%, historically high for the state. For Southern Maryland, the unemployment rate is under the State rate(Charles 9.7%, Calvert 7.7%, and St. Mary’s 6.9%).
However, those rates haven’t dropped much since the Coronavirus Pandemic shut the state down and millions were left without pay. The latest data available from the Maryland Department of Labor states Maryland added 29,800 jobs in May and the unemployment rate decreased to 9.9% (April’s unemployment rate was later revised to 10.1%).
Coupled with the extra $600-a-week unemployment benefit set to expire on July 25, 2020, experts are predicting Maryland’s need for personal loans will rise.
“We should expect a rise in loan interest once the extra $600 per week in unemployment benefits expires, but exactly how much of an increase there is depends on how responsible Americans are and how much the job market improves,” said Jill Gonzalez, WalletHub analyst. “Right now, many people are getting paid more while unemployed than they did while employed, so there should be an opportunity to save cash and avoid loans. We should not forget that parts of our economy will not recover until we have a vaccine for COVID-19, so it is important that reasonable unemployment benefits continue through that period.”
WalletHub combined internal credit report data and data from Google Search to compile the list of 50 states. For the Search terms “Loan”, “Payday Loans” Maryland ranked near the top at 3rd and 2nd, respectively. For “Home Equity Loans”, Maryland ranks 28th, near the middle of the pack. In terms of credit reporting, Maryland residents ranked 5th in an average credit score change.
“Searching for payday loans is always concerning. Payday loans are an extremely expensive lending option, as they charge exorbitant interest rates and give consumers very little time – until their next paycheck – to pay the money back,” said Gonzalez. “While many people take payday loans out of desperation or because they have bad credit, there are safer loan options available to most people. Payday loans should only be a last resort.”
While Maryland ranks near the top in those looking for extra money to get by, they should look at all options available to them, including cutting back on expenses.
“Borrowing should be a last resort during the COVID-19 pandemic after people have exhausted all other options – from federal and state government benefits to relief from creditors. Most major banks and credit unions will offer some form of assistance to people affected by the pandemic, such as delayed due dates or waived finance charges, but you have to ask,” said Gonzalez. “For people who have to borrow, there is no one solution that is best for everyone. Credit cards are best for short-term borrowing and continuous purchasing power, while personal loans provide a longer-term solution and often have lower APRs. Home equity products provide the lowest interest rates and longest payoff timelines, but the borrower’s house serves as collateral. Ultimately, people should choose the option they are most comfortable with.”
In order to identify the states where people need loans the most during the coronavirus pandemic, WalletHub combined internal credit report data with data on Google search increases for three loan-related terms in the 50 states and the District of Columbia.
The analysis compares loan-related search interest values for June 2020. Values were calculated on a scale from 0 to 100, where 100 is the location with the most popularity as a fraction of total searches in that location. A value of 50 indicates a location which is half as popular. A value of 0 indicates a location where there was not enough data for this term.
- Change in Average Inquiry Count June 24, 2020 vs. January 1, 2020: Full Weight (~25.00 Points)
- “Loan” Search Interest Index: Full Weight (~25.00 Points)
- “Payday Loans” Search Interest Index: Full Weight (~25.00 Points)
- “Home Equity Loan” Search Interest Index: Full Weight (~25.00 Points)
Sources: Data used to create this ranking were collected from Google Trends and WalletHub data.