There’s no doubt that due to the COVID – 19 crisis, many fellow Americans may face a long-lasting financial hardship. Over 22 million people have already filed for unemployment (PDF, 243KB), and as per a survey conducted by WalletHub, 67 million Americans may face difficulties paying off their credit card bills.
To help our fellow Americans fight against financial stress, the U.S. government passed a $2 trillion stimulus package recently. But, practically that stimulus checks may not last long and people will still be suffering from financial problems.
Fortunately, being a responsible citizen, you may follow these below-given options to save the day and share it with other people.
Tips to protect yourself from financial stress
1) Contact your credit card provider and ask them to lower rates
Considering the current coronavirus outbreak, people might face many financial difficulties due to their credit card debts. But, being a credit card holder you have options to get out of such a situation. You may call your credit card provider and negotiate your interest rate, or ask them not to report your late payments to credit bureaus.
Some of the popular credit card companies are also helping their customers to cope with the pandemic. Chase has decided to waive off fees and extend its credit card payment due dates to all customers. American Express is waiving interest and late payment fees for customers who have specific personal and business cards. Citi is offering its customers the option to apply for a temporary pause on credit card minimum payments or extend their line of credit. Bank of America provided an online form where its customers can apply for payment deferrals. Capital One has also initiated an assistance program so that they can waive off interest and fees.
Most of these programs are considering a few specific criteria, so you must call and know more about them from your credit card provider before taking these benefits.
2) Call your mortgage lender
Your monthly mortgage payment might be the biggest expense that you need to carry every month. During this pandemic, you might be facing a problem keeping up with the payments. So, as a last resort, you may call your mortgage lender and get information about possible alternatives. You must tell them directly how much you are financially affected due to the COVID-19. When discussing your options, make sure to ask them:
- Can they defer payments to you?
- What alternate payment plans can they suggest to you?
Make sure to get every option they offer in writing and keep track of what you’re paying and the time of payment. Some lenders may ask for a financial hardship letter, which will prove that you’re facing financial stress due to the pandemic and what type of option you are looking for.
Fortunately, considering the recent events, many lenders are willing to help their borrowers to get rid of financial stress. Bank of America, Ally Bank, and Citibank are some of the popular banks that have already announced easy options for their borrowers.
If you are staying in a rented apartment and having issues managing your rent payment, you may also talk to your landlord. Ask the landlord if there is an option to pay a minimum rent payment if somehow you can’t pay the rent in full. You must also check with your state’s tenant agency and look for rent payment hardship protections, freezes, or eviction waivers. To find your state agency, check out the Department of Housing and Urban Development directory.
The Consumer Financial Protection Bureau (CFPB), Federal Housing Finance Agency (FHFA), and U.S. Department of Housing and Urban Development (HUD) also helped homeowners and renters during the coronavirus pandemic.
3. Start building an emergency budget
Keeping a budget can help you to control your finances under such critical circumstances. You may plan a new version of the housing budget for emergencies. It should be leaner compared to your current normal budget plan. It will help you to determine what is the minimum amount of money you need to maintain your budget categories.
Your emergency budget should include only essential expenses only. You can remove all the unnecessary expenses such as expensive groceries, costly food items, magazine subscriptions, refrigerated meal-prep boxes, extra streaming services, expensive clothes, gym membership, and many more.
You should count on free streaming concerts, your personal video collection, home gymming, and exercising, etc. Avoid ordering food from outside, trust in homemade healthy meals.
Don’t forget to track your expenses. If you notice that you are spending more than your allotted money in a particular category, then you should stop spending right now. Always think before spending on anything and ask yourself how much do you need that thing.
Take a break and prepare a list of the things that trigger your spending habits. You need to avoid such things if you want to save money from your credit cards. You may want to unsubscribe from newsletters and emails from online stores like Amazon or eBay, follow the Facebook pages of brands, or stop browsing the web.
4. Consider a balance transfer card
If you have too much credit card debt and you still haven’t talked with your credit card provider, then you may opt for balance transfer cards. You may use a 0% balance transfer card to transfer your balance from your other high-balance credit cards. Some credit card providers offer zero transfer fees and/or promotional periods with 6-18 months of 0% interest on the transferred balance.
If you decide to opt for a balance transfer card, first of all, make sure to get a card that offers 0% APR for a longer period. Apart from that, you should look for a minimum or zero transfer fee offer with the new card. Before signing the agreement, make sure you understand all the terms and conditions and read all the fine prints. Practically, you’ll get better options if your credit score is high. Once you get a good balance transfer card and transfer your high-interest credit card debts into that card, you’ll be relieved from your financial stress quite a bit.
5. Look for local community relief programs
One of the most important things people are doing during this coronavirus crisis is working together to help people in their community. Many churches are helping people in their locality to get supplies, and multiple restaurants have supplied meals for healthcare workers. There are few social groups that provide food and bulk grocery items to many families who can’t go into grocery stores.
Some state and local governments providing relief, such as California, have released plans that include up to three months of deferred mortgage payments.