The U.S. charge card payment holiday ended on October 31, 2022, as well as for millions of charge card consumers struggling to keep up with payments because of the pandemic-fueled lockdowns, the post-holiday outlook isn•t exactly crystal clear.
“Credit card payment holidays were extended to cardholders experiencing financial hardship as a result of the coronavirus outbreak,” said Andrea Woroch, a family finance expert at AndreaWoroch.com. “They waived payment requirements and canceled late payments during this period so you weren•t on the hook for the minimum due.”
Credit scores were protected, too, throughout the card payment holiday.
“Another plus was that non-payments or late payments didn•t end up in your credit file. However, using the charge card file going to expire, any non-payment will now be reported towards the credit bureaus and that means your credit score will take a hit. Plus, cardholders might be slapped with late fees or higher rate of interest penalties for missed, late or outright non-payments.”
Depending on the credit card provider, consumers could count on some type of payment respite from card debt throughout the past seven months – in the heart of the pandemic.
Bank of the usa, for example, allowed customer payment deferrals if they were struggling financially. Capital One offered customers a menu of relief options, including the waiving of great interest and fees for consumer and business cardholders, together with minimum payment assistance and deferred loan payments.
During the pandemic, cardholders like Citi have also offered credit line upgrades, payment forbearance (a temporary suspension of card payments), and increased fraud protection assistance.
Now those charge card payments have returned on the schedule – whether cardholders are prepared or not.
“The COVID payment holiday set into effect through the CARES Act, allowed credit cardholders to postpone or defer payments on their own credit card obligations in the short to intermediate-term,” said Adem Selita, founder of The Debt Relief Company in Nyc, N.Y. “Unfortunately, the vacation was never meant to be a long-term solution for consumers still struggling financially and comes with an expiration date."
What to complete whenever your credit card payment holiday ends
With most card companies sticking with the October 31 deadline for payment holidays, what options do credit card consumers have now – even while the pandemic rolls on? Financial experts advise that consumers stay calm, carry on, and apply these pointers and strategies if they can•t meet their credit card payment obligations.
- Be proactive
- Ask about ongoing hardship programs
- Get a zero balance transfer credit card
- Opt for a debt consolidation loan
“Get on the phone together with your credit card company and explain your situation,” Woroch advised. “If you possess the capability to pay a number of your bill, although not all, you may be in a position to negotiate a lesser payment amount. Otherwise, you may be eligible for a extra time. Some cards could also offer tailored support with different cardholder•s financial situation. Any extension might be focused on a case by case basis so those individuals who aren•t financially impacted don•t make the most of payment deferral programs.”
“Absolutely stay in touch with your credit card company,” said Todd Christensen, education manager at Money Fit by DRS, a nonprofit debt settlement agency in Boise, Id. “When the credit card issuers don't know your circumstances, they will assume the worst.”
“You can find some options available for between 12 to 21 months, in line with the card's promotion,” Woroch said. “You won•t accrue interest and so your minimum monthly obligations actually go fully toward your principal balance, assisting you chip away at your debt faster without fees building up.”
Financial consumers compares balance transfer charge cards at sites like PayPasser, where card users can decide on numerous zero balance credit cards in a couple of minutes.
“A debt consolidation reduction could definitely help overcome a short-term cash hurdle, particularly if the effective APR paid is going to be much lower than a cardholder•s current card rate of interest,” Selita said. “However, the main issue with debt consolidation loans is that they will typically improve your payment per month (in accordance with charge card minimums) and aren•t always a practical cash flow solution.”
If a debt consolidation reduction loan makes sense, visit PayPasser, where borrowers can check unsecured loans with interest rates as low as 4.99%, with no damage their credit ratings.