Cobalt Advisors and Credit 9 have joined Saxton Associates and Hornet Partners in flooding the market with debt consolidation and personal loan offers in the mail. The problem is that the terms and conditions are at the very least confusing, and possibly even suspect. The interest rates are so low that you would have to have near-perfect credit to be approved for one of their offers. Best 2020 Reviews, the personal finance review site, has been following Carina Advisors (also known as Corey Advisors, Pennon Partners, Jayhawk Advisors, Clay Advisors, Colony Associates, and Pine Advisors, etc.).
Millions of people around the country have lost their jobs due to the Coronavirus. These job losses have been especially hard for those with high credit card bills. Here are some strategies to keep up payments on your credit card bills.
Get help with paying your credit card bills
Many credit card companies have offered to help their customers who are struggling during the Coronavirus crisis. Some of these companies have waived fees and have also permitted debtors to defer their payments.
These short-term solutions may be helpful to some people, but offer little assistance for others that are struggling with deeper credit card debt.
Certain credit card issuers offer debtors access to credit card hardship programs. These programs lower the interest rates on credit cards to make it easier for debtors to pay their credit card bills.
Revising your spending habits
The pandemic has forced many to cut back on eating out, going to the movies, and buying expensive gifts. People that have revised their spending habits in the recent past may not be using their credit cards as often as they once did.
If you are using your credit card less frequently than before, it may be worth switching to a different card with no annual fee. This lets you keep your account active, but at a lower cost.
Paying credit card bills using automatic payments
Some people pay off their credit card bills using automatic payment systems that transfer money from their checking accounts to their credit card automatically. However, this could incur overdraft fees if the checking account’s balance is lower than the credit card bill amount.
To avoid this issue, many people set their automatic payment system to transfer only the minimum required amount needed for the credit card bill.
Is it smart to pay other bills with your credit card?
Credit cards are often used to make new purchases with the intention of paying for these purchases in the near future. This essentially makes them loans that need to be paid back on time.
This is why people should avoid paying their other bills using their credit card. However, some credit card companies may be more lax about their policies during pandemics.
This means you may be able to get away with carrying your credit card bill over from previous months, or utilize a higher percentage of your credit limit without damaging your credit score significantly.
How to resist paying bills with your credit card
If you have bills to pay, but don’t want to pay them using your credit card, you may have to ask your bill provider for assistance. You should contact your electricity and gas providers, cable providers, or landlords and tell them about the financial hardships you are experiencing during the pandemic.
If you’re lucky, they may defer your bill to a later time, or reduce the total amount owed on the bill. This is a suitable option if you want to avoid racking up your credit card bill.
When should you pay your bills with a credit card?
If the company that has issued you the bill refuses to provide any assistance, you may have to pay your bill using a credit card. Certain companies charge an extra fee if you pay their bills via credit card, but you may have no other option.
Once this charge has been made on your card, you should pay off your credit card bill as soon as possible to avoid incurring interest.
Avoiding interest on credit card bills
Some credit cards allow you to pay 0% interest on purchases and balance transfers. This arrangement could be helpful if you are struggling with finances in the short-run, but need to make a large purchase.
However, to qualify for these cards, you need to have a good credit score. In addition to this, certain balance transfer cards ask for a 3 – 5% fee on transfers. You will also have to pay interest on any balances that are present on the card once the no-interest period has ended.
Lowering interest with loan consolidation
People with good credit scores may be able to pay off multiple credit card bills by using loan consolidation. This practice involves paying off multiple high-interest credit card debts using a single low-interest loan. Using this method, debtors can pay a lower average interest rate on their debts.
However, this option is only available to debtors with good credit scores. Most credit card companies are reluctant to provide these low-interest loans to people with poor credit histories due to the risk of them missing payments. You may have to consider credit card refinancing vs. debt consolidation.
Using loan consolidation to cut down on credit card bills
If your credit history is in good standing, it should be easy to acquire a large personal loan from an online lender, credit union, or a bank. It should be noted that many consolidation loans tend to be offered on lengthy terms such as 5-year loans.
This loan may offer a lower interest rate than the credit card bills it is being used to payoff. But the total amount of interest paid over the consolidation loan’s longer term could be larger than the interest amount that would have been paid on the other debts. It still may be a better way to consolidate debt.
The aforementioned options are the best ways to pay off your credit card bills or cut down on interest payments. These methods may not be suitable for everyone, as your credit score or interest rate may differ from that of others.
However, if you are able to understand the advantages and limitations of each method, you can minimize the number of risks you expose yourself and your finances to.
The Coronavirus will continue to affect the economy for a while, so it’s best for people to take all the precautions they can beforehand to ensure that they are able to keep up with payments on their credit card bills and avoid damaging their credit score during these troubling times.