Credit card issuers are helping consumers affected by coronavirus

Promotional financing can be helpful (as long as you have a plan)

The uncertainty of the coronavirus outbreak has many stressed-out shoppers racing to the supermarkets. And many consumers are concerned with how they will afford to finance everyday expenses as an increasing number of Americans find themselves out of work during the outbreak.

If this describes you, a 0% APR credit card may seem like a simple fix, but “spending during a sensitive time can distort the way you see debt and care about the amount that you’re charging on your cards,” says Tayne.

Citi is offering credit line increases and collection forbearance

Through Citi’s “always on” assistance programs, the card issuer is allowing eligible cardholders to increase their credit line and/or begin a collection forbearance plan if they can’t pay back their debts. But Tayne warns consumers to be careful taking advantage of these programs: “Increased credit lines, in particular, can be dangerous.”

 

Should I increase my credit line?

“While it can seem like a relief if you’re strapped for cash, the more you charge on your credit card, the more difficult it will be to get out of debt,” says Tayne.

Plus, “the temptation to overspend may also be greater when you know you have access to more funding.”

“Additionally, it’s important to keep in mind the impact on your credit score,” Tayne says. “A greater credit line can actually be beneficial to your credit score if you’re not using all of it. However, maxing out your cards will cause your score to drop because credit utilization is a major factor in determining your score.”

What is forbearance?

While forbearance is not the same as forgiveness, it allows for a temporary reprieve in the event you cannot make your minimum payments. Every forbearance program is unique to both the lender and the cardholder, but most usually allow for a short period of no payments (around six months) and occasionally other assistance like lower interest.

You can ask your card issuer about temporary relief

While you’ll likely hear a lot about low-APR small business loans and personal loans in the coming weeks, most banks also encourage credit cardholders to call the customer service number on the back of their credit cards to inquire about financial help during coronavirus.

https://www.cnbc.com/select/using-credit-cards-during-coronavirus/