How to control your credit card debts during Covid-19

For many people, credit cards provide an essential resource when funds are tight. For example, if you have recently lost income due to the coronavirus pandemic, your credit card may be an important lifeline for meeting basic needs.

At the same time, if you cannot pay on time, credit card debt may increase rapidly. This, in turn, will lead to long-term financial challenges. However, many credit card companies are ready to work with customers affected by the pandemic.

If you cannot pay by credit card or think you may not be able to pay soon, please notify your credit card company as quickly as possible.

In times of financial difficulty, credit cards are one of the easiest ways to get cash

A report by CreditCards.com shows that more than half of 51% of adults with credit card debt (approximately 51 million people) increased their balances during the coronavirus crisis. Additionally, the report found that 44% of people blamed the pandemic. In addition, Americans’ confidence in their ability to pay card balances declined in January.

Although some people have reduced their spending and increased their savings, many people are still struggling.

According to the latest data from the Federal Reserve Bank of New York, overall, credit card balances declined slightly after the pandemic. The number of households that paid off existing credit card debts also has a sharp drop. The average balance now is approximately US$5,315, down from US$6,194 a year ago.

If you only make a minimum payment for a balance of $5,000, it will take more than 15 years to pay off. In addition, you will incur more than $5,400 in interest charges (assuming interest rates are about 16%).

Coronavirus and credit card relief programs

However, many credit card companies offer financial relief to customers affected by the coronavirus pandemic.

To take advantage of any of these relief programs, you need to contact your provider first to request financial assistance formally.

Although it will vary from company to company, the following are some of the most common forms of help provided by companies.

 

Reduce or postpone your minimum monthly payment

Many credit card companies offer emergency tolerance, allowing you to skip or reduce payments within a limited time. However, remember that you will need to make up for any omitted or reduced expenses after your probation period ends. When the grace period ends, you will not be required to make up the missed payment immediately, but you need to resume at least the minimum monthly payment, which may have changed.

Waiver or refund of late fees

If you miss a payment, your credit card company will usually charge you a late fee. However, if you request financial relief during the coronavirus pandemic due to the pandemic, many companies will waive or refund late fees.

Lower interest rates

The interest rate of a credit card is the price you pay to the company to obtain borrowing capacity. If you ask, your credit card company may temporarily reduce your difficult interest rate. However, keep in mind that the credit card interest rate will return to normal at the end of the term.

Develop a payment plan to repay the existing balance

If your working hours are reduced, or you can only make a partial payment, you can also develop a repayment plan that is more suitable for your current situation.

Below we will name specific credit card companies and their covid-19 relief plans.

American Express

American Express provides advice on how to manage your account online. It will also direct cardholders who booked through Amex Travel to a separate COVID-19 information center for airline-specific details. In addition, the issuer may reduce your monthly payment and provide relief measures such as late payment fees.

Chase

If you are affected by COVID-19, if you register online for help, you may be delayed in paying with your personal or corporate credit card. Chase also has a dedicated website that can answer travel-related questions for cardholders.

Apple Card

Apple Card customers may have received an email about the option to sign up for the Apple Card Customer Assistance Program, which you can access on the lender’s support page.

HSBC

If you are affected by the coronavirus, you can postpone payment through HSBC’s relief plan. The lender also offers to reduce your cost, waive interest charges, and waive late fees within 90 days from the date you sign up for the plan.

Navy Federal Credit Union

Navy Federal Credit Union provides options for customers affected by COVID-19, including increased credit limits, overdraft protection, and free transfers. Additionally, cardholders can use the mobile application to request an increase in credit limit.

This list does not cover every credit card issuer, and yours may not be included. For example, suppose you are worried about credit card payments and are unsure what assistance your card issuing bank is providing. In that case, check the card-issuing bank’s website or call its customer service phone to discuss the help it might offer you.

How to control credit card bills

If you are unable to pay, you may face many complex financial decisions. Though, even in difficult times, some good rules tips can help you pay attention to the credit card debts you have. As a result, you’ll be able to recover more quickly in the end.

Pay the minimum payment

If you lose income and you have to prioritize your bill, this can be complex guidance. However, you may receive financial assistance from the credit card company in some cases, but your interest will continue to increase. If this is the case, paying the minimum amount and paying on time may help reduce the burden in the future.

Pay attention to your bill and look for errors

If you believe that your credit card statement is incorrect, please send a billing error notification to your credit card company to dispute the charge.

Your credit card company has 30 days to confirm receipt of your notification and two complete billing cycles to investigate and respond to you.

The credit card company can work in good faith to obtain the necessary information, make a decision as quickly as possible, and comply with all other requirements before the error is resolved.

Check your credit report regularly

You can usually check your credit report once a year for free. However, the three major credit reporting agencies-Experian, TransUnion, and Equifax-currently allow consumers to view their reports for free every week.

You can also sign up for a credit card reduction package. Also, if you find a mistake, you should try to object. At this time, it is helpful to have a copy of the written agreement on hand.

Know your debt collection rights

If you are in debt or the payee tries to contact you, this will make the tight time even more stressful.

It is essential to verify their identity first to ensure that they are the legitimate payee. Still, you also have many rights, and the payee can work with you to develop a realistic repayment plan.