RALEIGH – North Carolinians are leading the United States in an area of economic demand that’s not likely to be a rank any state leaders really like: Searching for relief through loans as the COVID-19 pandemic continues to hit hard.

Our state ranks No. 1 as the one in which people are having to go into debt to survive the twin blows of health and economic crises, says financial news and information site WalletHub.

With nearly 1 million NC workers having now filed for unemployment, NC residents rank 12th or higher in the four categories reviewed by WalletHub for the study:

  • 6th – “Loan” search interest
  • 12th – “Payday Loans” search interest
  • 8th – “Home Equity Loan” search interest
  • 12th – Change in average inquiry count on May 14, 2020 vs. January 1, 2020

Is taking out loans now a wise choice? Not necessarily.

“Taking out a loan at this time could risk digging a deeper hole for one’s family or business. We have no certainty how long this crisis will last, nor what the devastation to business and person/family incomes will be,” Frank Shafroth, Director, Center for State and Local Government Leadership at George Mason University, told WalletHub.

“Moreover, with bleak warnings that COVID will come back after the summer, that would further undercut not only the ability to pay off one’s debts but could undercut one’s ability to make future borrowing – either to pay for critical medical care or to prevent being forced into bankruptcy.”

But P.V. Viswanath, Professor of Finance, Lubin School of Business at Pace University, said some loans can make sense.

“If you have a 403(b) or 401k plan that allows borrowing, there may be no problems, since the interest rates are going to be minimal for such borrowing. Obviously, with such borrowing, as for borrowing from any other source, it is important to have in mind how one will repay the loan,” he said.

“Especially if interest rates are high, implications for future cashflow might be severe. Hence it is crucial to try and plot out scenarios as to what will happen going forward. If your job situation is relatively secure (or you feel that you will be able to get another job once the situation improves), then you can feel more comfortable about borrowing.”

Here’s a look at the top five states based on the study:

Source: WalletHub

To put North Carolinians’ demand into perspective, WalletHub notes that the pandemic has led to “nearly 39 million Americans becoming jobless during the coronavirus pandemic and 44 percent of Americans expecting to go into more debt because of the crisis.”

To determine the rankings, 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.:

You can read the full report online.