How to save money on monthly payments during coronavirus
There are multiple ways to save money on monthly payments. (iStock)
The coronavirus pandemic hasn’t just impacted the health of Americans; it’s harmed their wallets, too. A recent survey about personal finances during the health crisis found that 82 percent of us are worried about making ends meet. Paying monthly bills, like rent or mortgages, credit card payments, and car loans can be challenging. Fortunately, there are a variety of ways you can get assistance and ease your stress around money.
Consolidate credit card debt
If you have high-interest credit card debt, one option is to take out a personal loan to consolidate the balance. If your credit score is good, you may be able to qualify for a personal loan with a lower interest rate than you’re currently paying on your credit cards. If you're interested in comparing rates for personal loans, use Credible's free online tool.
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Or you could look into balance transfer credit cards that help you reduce the amount of interest you’re paying. Some credit card companies offer a low or even 0 percent APR period that can help you make your monthly payment without accruing interest charges. Credible can help you shop and compare balance transfer credit cards to find the best deal for your situation.
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Find ways to save money on monthly payments
If you have private student loans, you may look into student loan refinancing as a way to lower your monthly payment. With Credible's free online tool, you can compare multiple lenders and refinance rates within minutes.
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If you have federal student loans, however, it’s best to keep them as is. The CARES Act set the interest rate at 0 percent, and it wouldn’t be beneficial to refinance them through private lenders. Also, when you refinance federal loans, you lose access to federal loan perks, such as repayment plans that are tied to your income or potential loan forgiveness.
Mortgage interest rates are also at record lows, and you may be able to qualify for mortgage refinancing that could help reduce your monthly costs. Credible offers access to loan calculators as well as current rates for refinancing mortgages.
Contact your lenders for more options
If you think you may drop behind on your monthly bills, it’s essential to reach out to your creditors before you miss a payment. Many Americans are affected by the current economy, and lenders are finding ways to work with borrowers. Inquire about hardship programs that reduce interest, extend payment dates, waive fees, or skip reporting to the credit bureaus.
It can help to prioritize your payments according to necessity as well as the potential for penalties. Many governments have put a moratorium on foreclosures and evictions, giving you time to save money before you risk the consequences of missed payments. Check your state’s website for information on the rules in your area.
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For example, under the CARES Act, federal student loan borrowers don’t have to make payments until September 30, 2020. You can also request a refund of student loan payments you made after March 13, 2020, and use the money for other bills. Many auto lenders are offering payment deferment, so you don’t risk having your car repossessed. If you’re currently leasing, some financing companies will also defer payments or extend your lease.
In addition, several utility companies are currently suspending late fees or disconnections, especially in states that have declared a state of emergency. And many providers are offering payment plans for customers who can’t pay in full. Check the utility’s website for details on their COVID-19 options.
Communication is key
If you don’t contact the lender or service provider and miss making a payment, you run the risk of hurting your credit score as well as accruing interest, penalties, and late fees.
Make sure you understand the details of forbearance and hardship programs. While you may be able to delay payment, you may accrue interest or even extend the term of your loan. In some cases, it may be to your advantage to tap into your emergency savings to pay your bills instead of pushing bills down the road.
If you haven’t done so already, look for expenses you can eliminate to pay your creditors. For example, consider canceling non-essential services, such as cable or streaming subscriptions. Sell items you no longer need on Facebook Marketplace or eBay. Or use credit card rewards to help pay for groceries during coronavirus.