With the Coronavirus pandemic wreaking havoc on the US business community and elected leaders requiring some businesses to close, credit cards are being used by consumers and business owners as one of several financial buffers to get through these tough times. Unfortunately, this has created a dilemma for anyone facing credit card debt, or those who are facing upcoming payments and feel unable to meet payment deadlines. However, this has led several credit card companies and banks to offer financial assistance programs including, credit card deferment options, if a financial hardship can be proven. There are several ways these programs could be implemented, but you should also know what will happen once they end. We’re going to explain that in this blog post.
Who Offers Credit Card Deferment?
Many well-known credit card companies are offering some form of deferred payments, whether they involve waived fees or alternative payment options. Here are some of the credit card companies who are offering some form of financial hardship assistance:
- Bank of America
- PNC Bank
- Wells Fargo
Each of these banks or lenders has its own policies on making payments, so you will need to contact your bank or credit card provider directly to find out how they can help you.
What’s Involved In Credit Card Deferred Payments?
You have to be careful before you try to take advantage of a credit card deferred payment program because it will be only temporary, and you may be hit with unpleasant surprises if you don’t carefully go through and follow the terms. Most credit card companies are also encouraging customers to apply for deferment through their websites since their service centers are experiencing high call volumes. But the deferment programs will usually have one or more of the following options:
- Postponing all monthly payments for a defined period
- Temporarily waiving or refunding late fees
- Lowering the interest rates for the deferment period
- Ensuring your credit score is not hurt if you’re in deferment
- Offering a different payment plan if your income has decreased due to COVID-19
Also, bear in mind, that if you were already delinquent in credit card payments prior to enrollment in a deferment plan, that may still stick on your credit report if you do not become current immediately. You should always constantly monitor your credit performance during this time, even if your payments have been deferred.
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What Happens Once Your Deferment Period Ends?
Remember, deferment or other forms of forbearance on credit card payments are only temporary, and as the economy starts reopening, you will have to make up for those missed payments. Since credit cards are unsecured debt, this could mean you will see your minimum monthly payment increase, your annual interest rate (APR) increase, and the way your credit is reported will go back to normal. You should make sure you know exactly what date the deferment plan ends and have a plan to make adjustments to meet deadlines and due dates. But the bottom line is you will be expected at some point to make up whatever difference in payments accrued during the deferment period.
How Should You Defeat Credit Card Debt Once Deferment Ends?
If you’re growing concerned about your financial situation even as you start going back to work or receiving unemployment benefits, you can still find ways to pay down credit card debt. You may want to use debt consolidation or something else like a Debt Management Program.
Options For Debt Consolidation:
The way you consolidate credit card debt could be through unsecured debt such as balance transfer cards or personal consolidation loans, or they could be through secured debt like home equity loans. Whichever option you choose, you should go with the plan that has the lowest annual interest rates. Some credit card debt consolidation options even involve zero interest rates for a certain period, but be warned that they could suddenly jump to very high rates. You should also make sure that you won’t pay any prepayment penalties if you pay off your consolidation loan or credit line early. We don’t recommend debt consolidation loans very often because it’s just moving the debt from one place to another. You’re just moving your debt around. It’s not addressing the core issues of how you acquired the debt in the first place.
Find A Reputable Consumer Credit Counseling Agency:
If you can’t qualify for a debt consolidation loan or you don’t feel that is the best option for you, a consumer credit counseling agency may be able to help work with your creditors to get your debt paid off. Sometimes they implement what’s known as a Debt Management Program in which you can make payments through them that are made to your creditors each month on your behalf. The creditors will usually lower your interest rate and sometimes even lower the monthly payment. Just make sure you do your research on a credit counseling agency before you decide to go with them to ensure they have helped other clients with debt, and they are fully accredited and licensed in your home state. They should be members of the National Foundation for Credit Counseling (NFCC) and have excellent reviews or ratings online. They should have a good reputation and be in business for a very long time. Don’t just sign up with any company that promises to get rid of your debt overnight. There are many scams out there, so do your due diligence and research.
Advantage CCS has been in business since 1968. We’re fully accredited and licensed, we’re members of the NFCC, and we have an A+ rating with the Better Business Bureau. Our organization is a reputable consumer credit counseling agency that you can trust. Reach out and contact us today to see how we can help!