WEST PALM BEACH, Fla. — Nine months into the COVID-19 pandemic and many people are inching by by making minimum payments on credit cards.
But with Pandemic Emergency Unemployment Compensation set to expire next month, staying in good standing with your credit card companies may be getting harder.
Many credit card companies are willing to set up a payment plan and waive fees or lower interests on your payments for a certain period of time, but there’s always fine print. There are other options without impacting your credit score.
Getting by by making minimum payments on her credit cards, Jana Krause is feeling financially strapped.
"I'm finding myself in a position that I was able to make my credit card payments on time. Now I'm concerned that that’s not going to be a happening thing coming up in the next months," Krause said.
With the Pandemic Emergency Unemployment Compensation set to expire next month, Krause reached out to her credit card companies hoping she can lower her minimum payments without having to go into a hardship program that would freeze her account and potentially impact her credit score.
"I'm stuck between a rock and a hard place," Krause said. "I've never experienced something like this in my life. I've never been out of a job."
At 74, Krause is considered high risk for COVID-19, and going back to teaching wellness classes is not an option for her.
Sara Rathner, a credit card expert at the finance company Nerd Wallet, said Krause is not alone.
"You can look into other options to free up cash in your budget to fulfill other obligations," Rathner said. "Turn to your utility companies, your landlord, your mortgage company, see what sorts of help they can provide. Maybe by freeing up cash in that way you’ll still be able to meet the minimum payments on your credit card."
And if that’s not possible, research personal loans or debt consolidation programs. But beware of scams.
"You can start with non-profit credit counseling that can help you come up with a debt repayment plan and debt consolidation, or even just get help reworking your budget to see if you can free up money to pay your bills," Rathner said.
Krause said she’s already cost conscious doing groceries.
"I'm not going to one of my favorite stores and getting my favorite treats, nothing. I mean, all that’s been cut out," Krause said.
Hardship payments programs may not be for everyone, but Rathner said weigh your priorities before you knock it.
"In an emergency, your credit score doesn’t need to be your first priority," Rathner said. "You can get yourself into a more stable situation and then focus on rebuilding your credit from there. Right now if what you need to do is keep a roof over your head, keep the lights on, and keep food on the table, that’s your number one priority."
