You Can't Pay Your Credit Card Minimums… Now What?
NEW YORK, September 25, 2020 (Newswire.com) - According to the Bureau of Labor Statistics, the U.S. unemployment rate rebounded to 8.4% in August. Unfortunately, as we approach October, many Americans still find themselves in a financial pickle.
Less money may be coming in, but essential expenses like rent or mortgage payments, utilities, and groceries have not gone away. Plus, for families with children, back-to-school necessities have made matters worse—especially with the costly technology and accommodations needed for virtual learning.
As one might expect, most people put these expenses on credit cards, which in the short term makes sense. But as these balances increase, it can be tough to keep up with the minimum monthly payments.
Ways to stay afloat during the pandemic
For workers directly impacted by COVID-19, most credit card companies are offering assistance for financial hardship. This could include lower or delayed minimum payments, or even reduced interest rates—all temporary, of course. Card issuers may also waive annual fees or give cardholders a break on late fees.
Those in trouble might consider a debt consolidation loan, which basically helps pay off all credit card balances and simplifies monthly payments into a single loan payment. The bright side of consolidating debt is that personal loans often come with lower interest rates than credit cards.
Another strategy that takes advantage of lower interest rates is moving credit card debt to a balance transfer card. A balance transfer card simplifies debts from multiple cards into one balance, usually offering an introductory period with 0% APR—in other words, no interest. The most important aspect of balance transfer terms is the length of that intro period, because interest rates will most likely increase drastically thereafter.
Getting back on track
For those looking for a way to make progress on debt repayment—even during these tough times—a patient approach will be key.
To start, some best practices include:
- Cutting back on daily non-essential expenses, like fancy coffee
- Pause unnecessary subscription services or memberships
- Find a way to make extra money on the side, like a side gig or selling unused items online
- Don’t take on any new debts!
Categories: Personal and Family Finances