What Can be Done About Credit Card Debt During the Pandemic
Ever since the COVID-19 pandemic started, you’ve known what to do to protect your health. You avoid crowds, practice social distancing, wear masks when you’re around others, and wash your hands regularly. These strategies have worked to keep you and your family free of the virus.
But when it comes to protecting your finances, you’re not so sure. Your employer may have cut back on your hours or closed completely, leaving you with no source of income. The other breadwinners in your family may have suffered the same fate.
You’ve turned to your credit cards as a buying resource. They’ve been a lifeline in helping you to cope with your daily needs. But the expenses keep mounting, and you’re finding it harder and harder to keep up even with the minimum payments. You may be in a panic because you need the purchasing power of your cards but are fast approaching your credit limit.
All is not lost. The US Consumer Financial Protection Bureau offers several options for dealing with mounting credit card debt.
Dealing with Your Credit Card Debt
Here are a few of the immediate steps you can take for dealing with your credit card debt:
- Prioritize your expenses. List your bills, their amounts, and when they’re due. Figure out which ones are important to your survival, such as rent, utilities, groceries, health insurance, transportation, and which ones can be temporarily stopped, such as magazine subscriptions, cable TV, or recreation. Look at the order in which you pay and the consequences of not paying or delaying the payment. Then number you can number them in the order that you want to pay or delay paying.
- Contact the service provider and see if they have any hardship programs for their customers. They may be able to waive payments, lower late fees, or change due dates to improve your cash flow. An example follows for contacting your credit card company.
- Check your credit reports. Your credit report may have suffered because of your increasing debt. Since this report affects everything from what credit you can obtain to how much interest you have pay, it’s worth checking. You can typically look at your credit reports from the big three agencies, Equifax, Experian, and TransUnion, once a year for free. However, these companies are currently allowing customers to check reports weekly for free. Contact them for details
- Look for errors. Some of the debt that you’ve accumulated may be due to simple mistakes. Be sure to check your bills and your credit reports for any needed corrections. If you spot any, contact the service provider for disciplines and eliminate any fees due to the error.
- Know your rights for debt collection. Debt collection companies who contact you can add to your stress, so make sure you know your rights. Many websites can explain such rights. At the very least, you can verify that the collection is legitimate. You can then work with them to create a realistic payment plan.
Contacting Your Credit Card Company
To help their users through the COVID-19 pandemic, many credit card companies now offer relief programs. However, you still need to request financial assistance formally. If you try to contact them by phone, you may be in for a long wait because many other customers are trying to do the same thing. You’ll typically find it faster to get in touch with the company using their websites or online applications.
Among the more common types of assistance that credit cards are offering now are the following:
- Lowering or deferring your monthly payment. You may either lower or skip your minimum monthly payment for a limited period. However, this does not eliminate your debt. Once the grace period ends, then you will need to make up for the missing payments and resume making the minimums, which may have increased.
- Reducing or eliminating late fees. If a is missed payment, your credit card company will charge you a late fee and may even increase the interest rate on the outstanding balance. However, if you requested in advance, they may waive any penalties, including fees, and keep the rate the same level.
- Reduce the interest rate. The credit company may lower your interest rate for a limited amount of time, which will temporarily reduce the money owed. But when the time expires, the interest rate will return to its prior level.
- Establish a payment plan to get rid of any existing balances. Your credit card reps may be willing to develop an alternative payment plan that is more manageable with your current budget.
If you’re successful in paying off one credit card, consider cutting it up. You don’t have to close the account because that can negatively affect your credit. But if you cut up the card, you won’t be tempted to use it. When you’re back on your financial feet, you can ask the credit card company to send you a replacement.
Consolidating Your Debt
Arguably the most stress-free and convenient way of immediately dealing with all your financial obligations at once is by consolidating your debt. This way typically combines what you owe into one monthly bill. Instead of dealing with different schedules, minimum payments, and interest rates, you only have to look at one payment. Such a strategy does require that you have good credit, which may have suffered since the pandemic started.
Avoid the hurdles associated with typical debt consolidation, and instead, consider a loan from Simple Path Financial. We understand how responsible and hardworking people, such as you, can be adversely affected by the coronavirus. You do not need additional stress as you try to remain healthy.
To that end, we offer unsecured personal loans ranging from $7,500 to $100,000. Interest rates can possibly be as low as 5.99 percent. Contact one of our Financial Consultants today via the online form or by phone. Funds can even be wired directly into your account in as little as 48 hours.