How to Reduce Credit Card Debt During Pandemic As nations continue to weather the coronavirus crisis, you must know how to reduce your credi...
How to Reduce Credit Card Debt During Pandemic
As nations continue to weather the coronavirus crisis, you must know how to reduce your credit card debt during the pandemic. These times have become turbulent, so managing your finances has become highly important.
With that said, you must know your debt collection rights and ask your lenders for assistance. You may request credit counseling for further guidance on how to pay off debt as well.
Know Your Debt Collection Rights
In response to the pandemic, the federal government has provided a $1,200 stimulus for millions of Americans. You should get it as a direct bank deposit, but you may check the IRS if you haven’t received yours. Still, beware of social media scams that ask to receive compensation, your social security number, or other financial details.
As for debt collection, some states have banned lenders from taking your stimulus as debt payment. However, debt collectors in other states may sue you and issue a garnishment order to seize your stimulus. Consequently, you must check with your state attorney general for further clarification.
For those with student debt, the collection has been temporarily suspended. Whether you’re in default or not, you may delay payments from March 13 to September 30. Student loan interest has been suspended as well. In addition, other payments like evictions and foreclosures may have been suspended depending on your state.
Defer Minimum Monthly Payment
In order to help fellow Americans, the major credit card companies have deferred monthly payments. However, you must confirm with your issuer to verify your eligibility. You may call them on the phone or contact them on the internet. Regardless, they request for patience as customers may experience longer wait times due to the crisis.
Waive Late Fees
Some of these companies have also waived late penalties and interest. As we’ve mentioned, you must still verify by contacting them. Some may still retain interest even though you’re allowed to temporarily delay payments. They might have customer assistance programs that may also waive interest charges, so check details and advertiser disclosures.
Consider Credit Counseling
Credit counseling may further assist you in managing your debts during the pandemic. Typically, it helps people pay off debt with debt management plans. Now, they continue to aid people in dealing with their debts such as mortgages and auto loans.
As always, they may negotiate with your lenders to lower their interest rates.
Other Debt Reduction Strategies
There are other debt reduction methods that may help you deal with credit card balances during the pandemic. For example, you may pay off your balances with a lump sum from a debt consolidation loan. These are available as personal loans or as features of balance transfer credit cards.
You could take out this loan to pay your debts and replace them with one that has lower interest. However, those with poor credit scores may receive the highest interest rates and other unfavorable loan terms. Alternatively, credit card issuers may offer balance transfer cards. In fact, some have 0% APR, helping you pay off debt easier.
Lastly, you may do it yourself with either the debt avalanche or the debt snowball method. The former involves paying the largest debt first while the latter initially involves the smallest. Both require completing minimum payments for other balances. More importantly, they will only work with unwavering determination and stern discipline.