Credit Cards in the Time of COVID-19
Even if you don't become sick from the coronavirus, it's likely that the pandemic could still affect you economically. Schools, organizations and businesses are closing down to stave off the spread of the virus, and depending on your financial situation, you might not be able to pay your bills on time.
While it can be stressful to wonder when you'll get another paycheck or how you're going to manage your debt with less or no income coming in, don't ignore the payment emails or throw away your card statements. Take the time to assess your financial situation and come up with a game plan for how you can keep any debt at bay. Get copies of your free annual credit report to know all of the accounts
One bit of good news is that credit card issuers understand that a lot of their customers are going to experience some economic hardship due to the pandemic, and many are taking steps to alleviate some of the hardship their customers might face.
At the very least, try to make at least the minimum payments on your cards. However, if you think you're going to have problems making even the minimum, the absolute first thing you should do is call your credit card issuer. Many banks are making allowances for their customers, but in many cases, these allowances won't apply unless you talk to them directly and tell them about your situation.
One situation that might be an option is forbearance. Forbearance means that you temporarily postpone your monthly payments, but your debts aren't completely forgiven.
You may also be able to negotiate with your bank to make lower payments or interest-only payments for a period of time.
While not every option will be available for every customer, these card issuers who are currently offering alternatives:
American Express is offering to lower monthly payments, provide relief from late payment fees, temporarily lower interest rates, and prevent accounts from going past due or further past due.
If you have an Apple credit card, Goldman Sachs, the financial arm behind the card, is letting customers who ask skip paying their March credit card bill, and they also won't have to pay interest.
Barclays is allowing customers to apply for temporary increases on their credit limits.
Capital One is allowing customers to skip payments without accruing interest
Citi is offering credit line increases and collection forbearance programs.
Even if it's not listed here, your bank may develop programs, or they may be able to work out other options, including letting you defer payments temporarily. If you do work out payment plans with your bank, make sure that your credit score won't be affected.
How will these options affect your credit score? VantageScore, one of the credit scoring models, says that while you're in forbearance or are deferring payments, your score won't be negatively impacted. However, if you were delinquent on payments before going into forbearance, that behavior will still impact your credit score.
VantageScore also says you can also ask your credit card issuer to add a code to your account—or it may also be called a trade line—that you've been "affected by a natural or declared disaster." That way, if something happens that would normally ding your score, like a skipped payment, your report will be "set to neutral" and these instances won't affect your score.
Equifax, Experian and TransUnion also allow you to add a short consumer statement to your credit report to explain your personal situation and that you'll be making payments as soon as possible. If you go this route, make sure you file the statement with all three credit bureaus.
While the credit card bills may be daunting during this time of crisis, work with your creditors to make a game plan to get you through the pandemic without adding financial stress to your list of woes.