Millions of people have lost their jobs and income during COVID-19 and are struggling to pay their bills, credit cards being one of the biggest struggles. It is important that you communicate with your credit card companies if you are unable to make your payments. Many of the larger credit card companies have limited staff but they are offering assistance. The credit card companies are trying to help by facilitating deferments to those effected by the pandemic. This a good short-term resolution, however, a lot of people are not looking at the long-term effects of these deferments.
Some of the long-term effects could be:
- Higher balances due to accruing interest.
- Higher balances due to the credit cards being used to supplement income.
- Higher minimum payments due to larger balances.
These things can affect people long after the pandemic is over, and they may still struggle to make their payments. Some ways to prevent these long-term effects are:
- Make payments – if you are able to make the full minimum payment, make it. If you can not make the minimum payment, then pay what you can, potentially covering the interest charged.
- If you are getting unemployment and the extra weekly payment of $600, make a crisis budget and make cutbacks in normal spending if possible so that you are able to cover your normal monthly expenses.
- If you are not getting unemployment and have limited income – create a crisis budget for now and make a plan on how you will be able to catch up on your bills once your income is back to normal.
- Try not to use the credit cards. – this will prevent balances that are too high for you to manage.
- If you feel as though you need help managing your credit card payments – talk to a certified credit counselor. We are here to help create a budget and help get you back on track with your finances.