Credit card forbearance: Why and how to opt for it during this pandemic
We all are going through a very difficult situation. Many of us are not allowed to go outside our homes, and we are stressed about our physical, mental, and financial health. Many people are losing jobs and are experiencing pay cuts. As a result, they are facing difficulty to make their credit card payments and be current on other loans. So, in this situation, it will be a great help if you can delay your credit card dues for some time.
Why opt for credit card forbearance for some time
Yes, I agree that it’s not recommended to default on your credit cards. But, in the present situation, if you’re not able to make the required payments, you can opt for credit card forbearance for a couple of months.
By doing so, you can use your money to meet your daily necessities. Many people have not yet got their stimulus check. So, at this time, it can be a great help if you can opt for credit card forbearance and use your money for other necessities. However, before doing that, check with your bank if they’re providing any assistance program. Most of the banks are offering some kind of help to their customers to deal with the present situation.
Let’s see how you can delay credit card payment during this COVID-19 phase.
How can you delay your credit card payment?
Many people have lost their jobs due to this pandemic. As a result, they are struggling to pay their bills, and in turn, acquiring quite a bit of credit card debt.
Just prior to this situation, credit card debt hit a record of about $930 billion in the last quarter of 2019. The experts say that it will increase in 2020.
So, let’s see what measures are being taken to tackle this situation. How can you default on credit card payment for a while?
Call your credit card company
It is always better to call your credit card issuer when you’re facing any problem. It is applicable in all scenarios, especially during this current situation when the world is struggling to fight this pandemic.
It is advisable to call the number that’s there at the back of your credit card. You might opt for the website chat option too if it’s available.
Explain your financial situation
Be ready with how you’ll explain your situation to your credit card issuer. If you’re laid off or there’s a pay cut, explain it.
If it’s possible, share the documents to prove your situation.
If you have a joint account, you can even explain if your partner is facing such an issue. Because it might be difficult to maintain your budget and pay bills when your family income gets reduced.
Request if they can offer any help to deal with the debt
After explaining your situation, you can ask how the bank can help you out. They can waive the late fee, lower interest rates, etc.
Once they talk about any assistance, make sure you get that in writing. Ask any questions you need to know like how long it’ll be effective.
Talk about the assistance program
If you opt for credit card forbearance now, then usually, the interest gets accrued, but the credit card issuer won’t report anything to the credit bureaus. So, your credit report and score won’t get affected. However, accruing interest can increase your credit utilization ratio, which in turn, can decrease your credit score to some extent.
As per the CARES Act (Coronavirus Aid, Relief, and Economic Security Act), which was signed into law in March 2020, some protections are offered to the consumers.
You can ask your creditors and lenders to add a specific code to your credit report that will prove that you have been “affected by a natural or declared disaster”. The VantageScore will take into account such codes while calculating your score.
What steps the banks have taken to help their consumers
Many banks have come forward to help the consumers manage their credit card debt in a better way. However, the changes are not the same. So, you should call your bank and ask for assistance if you’re facing any difficulty to manage your credit card debt.
Here are a few questions that you can ask when you call your bank.
- If there’s a late payment, will it get reported to the credit bureaus?
- Will there be any late payment fee?
- Can it increase your credit card limit?
- Is it possible to lower the interest rate for the time being?
Also, you can ask whether or not you’ll get a refund for the miles and points that you used to book for a trip but which got canceled.
To conclude I would like to mention that if required, you can opt for a credit card settlement program to tackle your debts. Without leaving your home, you can call a reliable company and if you’re eligible, you can opt for such a program.
All that you have to do is make an affordable monthly payment to the settlement company, and they’ll handle everything like talking to your creditors, convincing them about lowering the debt amount, and so on. If you can make the required monthly payment to the company, you can be debt free within a definite time.
I would say that be optimistic and stay positive. We can overcome this difficult time and good days are just around the corner. Let’s take care of ourselves, our family, and others who need our help at this time. We will win!