Credit Repair

Credit Cards and Coronavirus: An FAQ

 

LendingTree’s Chief Credit Analyst Matt Schulz addresses some frequently asked questions from credit cardholders.

When it comes to the coronavirus, there are still many more questions than answers. That’s causing a tremendous amount of fear and anxiety throughout America and the world as people wrestle with a problem the likes of which we haven’t seen in our lifetimes.

Though obviously secondary to concerns about health and public safety, questions about money are at the top of many people’s minds. The outbreak has upended people’s financial lives and will likely continue to do so in the near future.

The goal of this page is answer some of those lingering questions that involve credit cards. Credit cards have been a major topic of discussion – whether it involves making payments, canceling rewards travel or something else – around the outbreak and we hope that this page can provide some clarity for cardholders.

We will be adding to this page as events warrant.

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I may not be able to pay my credit card bill. What do I do?

First of all, know you’re not alone. This outbreak is going to wreak massive financial havoc upon millions of Americans. You should also know, however, that you are not powerless.

Once you realize that you might not be able to pay your bill, call your credit card issuer and let them know what’s happening. If you or one of your relatives is sick and your income will suffer, tell them. If you just lost your job, make sure they know. Whatever the reason, share it with them. You certainly won’t be the first or last person to do so.

Call the 800 number on the back of your card. Once you call, if you’re not happy with the response from the first person you speak with, ask to speak to their manager.

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What good will it do to call my card issuer?

You can accomplish a lot with that phone call. When disaster strikes, banks kick into gear with so-called hardship programs that help people navigate the sudden tough times thrust upon them. These programs come into play in the wake of events like hurricanes, wildfires, terror attacks and, yes, pandemics.

In most cases, however, you need to take the first step and request help. That’s why it’s so important to make that phone call.

To be clear, there’s no guarantee your card issuer will offer any sort of assistance, but you won’t know unless you ask. The good news is that an April 13 survey from LendingTree shows that the vast majority of those who ask do get some kind of help.

Here’s some of what the survey found:

  • High success rates: 91% of credit cardholders who asked their card issuer for a break on their monthly payment because of coronavirus-related circumstances got one. Of those who asked, 67% got a break on every card they asked about, and another 24% got a break on some of their cards. Just 9% didn’t get a break on any card.
  • Breaks on mortgage payments, too: 91% of homeowners who asked their mortgage lender for a reprieve from their monthly payment because of the outbreak were granted one.
  • Too few people ask: Just 30% of cardholders and homeowners asked for a break on their credit card or mortgage payment. The most common reasons given were simply that their finances hadn’t been that severely impacted by the pandemic. However, nearly 1 in 5 people who didn’t ask for help with their credit card or mortgage payments said they didn’t realize they had that option, including about a quarter of millennials .
  • Gender gap emerges: Men were far more likely than women to be successful when asking for a break and were more than twice as likely to ask. Just 18% of women asked for a break on their credit card payment versus 41% of men. Among those who asked, 93% of men got that request granted for at least one of their cards, compared with 86% for women.
  • Gen X crowned most likely to succeed: Gen Xers had the highest success rate when asking for breaks on both mortgages and credit cards, and were the most likely to ask for one on their card payment. Meanwhile, just 7% of baby boomers asked for a break on their credit card payment.

Those sky-high success rates show that it is not just folks with 800 credit scores who are getting their requests granted.

Again, lenders aren’t likely to seek you out to offer you this help, so it’s up to you to make sure you get it. Whether you make a call, send a tweet or write up an email, take the time to contact your lender and then be persistent. Nobody cares as much about your money as you do, so stay on the case until you get the help you’re looking for. You’ll be glad you did.

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What kinds of breaks are offered in credit card issuers’ hardship programs?

Your mileage may vary, but changes that may be offered up include:

  • Higher credit limits
  • Reduced APRs
  • Extended payment deadlines
  • Reduced minimum payments
  • Waived late fees
  • Not reporting late payments to credit bureaus

These are significant moves by the bank that can have a real impact – either in the short term or long term — for people who are struggling.

If you’d like to request something that isn’t listed above, go for it. The worst thing that can happen is that they say “no,” but they might say “yes.”

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Has the federal government required issuers to offer any specific help to cardholders struggling because of the outbreak?

No, and it’s unclear if any such requirements will come.

The Federal Reserve has made several moves that impact struggling cardholders, including significantly reducing interest rates, but we have not seen any sort of federal blanket mandate requiring financial institutions to take any specific actions to help cardholders whose financial lives have been flipped upside-down by the outbreak.

That hasn’t been the case with all types of lending, however. For example, the Coronavirus Aid, Relief and Economic Security Act (better known as the CARES Act) was signed into law in March and grants some homeowners, among other things, the right to request a 180-day mortgage forbearance and also a 180-day extension. It’s important to note, however, that the act only applies to homeowners whose mortgages are owned by Fannie Mae or Freddie Mac, or are backed by the FHA, VA or USDA.

When it comes to credit cards, however, don’t expect any overarching mandates from the federal government anytime soon. On April 8, former presidential candidate Sen. Kamala Harris (D-Calif.) wrote in an essay on Medium.com that she was “calling for the suspension of credit card interest, fees and penalties until at least four months after this crisis is over.” Given Harris’ prominence in national politics – she is seen by many experts to be a top contender to be the running mate for presumptive Democratic presidential nominee Joe Biden – the statement made headlines. It remains to be seen, however, if the idea will gain any traction.

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I’ve got a lot of debt, but I can still pay my bills. Can I take part in the hardship program?

You can certainly ask, but the answer will almost certainly be no. While having a ton of debt is definitely a hardship, it’s not the type of hardship that these programs are meant to address.

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What should I say when asking about the hardship program?

Call the 800 number on the back of your credit card and ask for someone who works with the customer hardship program or the customer assistance team. Once you get in touch with an individual involved with these programs, tell them your story. Tell them what’s causing your hardship. Tell them how long you think it might last, as difficult as that might be to discern. And if you have a long history with the issuer and good credit, tell them that, too. You don’t need to tell them your entire life story. Just make sure they understand your situation. (Documentation can help, too.)

Also, if there is a specific request that you’re most concerned about, tell them that as well. Maybe you need a higher credit limit to help make ends meet for a short time. Maybe you need a couple of extra weeks to be able to make your payment. These details are all part of your story and can help your issuer understand your circumstances better.

If you find the representative isn’t being helpful or cooperative, ask to speak to their manager.

Above all, be persistent. It may take a few phone calls to get your way. You may have to sit on hold for long periods of time as banks deal with the onslaught of other struggling consumers. And it is always a good idea to take notes of who you speak with, when you spoke with them and what they said. The more organized you can be with these things, the better.

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How long should I expect these breaks will last?

Depends on your individual circumstances. They might last three to six months, but there aren’t hard and fast rules.

With the coronavirus outbreak in particular, no one can tell you how long it will last, so it’s unreasonable to put a concrete timeline on how long assistance will last. Talk with your issuer about that.

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If I want to cancel my travel plans because of the coronavirus, will my credit card’s travel insurance help me?

It depends. If you just want to cancel because you’re concerned about getting sick, you’re likely out of luck. However, if you’re already sick and can provide a doctor’s note saying that you shouldn’t travel, your insurance might help. Also, if you get sick while you’re traveling and you need to be quarantined, many cards’ travel insurance policies will cover you. In fact, several cards’ policies include the term “quarantine” in their fine print as situations in which their coverage does apply. Before a few weeks ago, hardly anyone gave that bit of information a moment’s thought, but times have certainly changed.

One thing that is certain is that credit card travel insurance is not a “cancel for any reason and you’re still covered” type of policy. Those insurance plans do exist, and you can get them through Travelex and other companies, but they won’t come cheap.

Ultimately, if you have a question about what your card’s insurance covers, call the 800 number on the back of your card and ask.

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Where can I find out more about what credit card issuers are doing to help?

Virtually every card issuer has a coronavirus or COVID-19 information page front and center on their websites, but there’s a wide variety in what those pages include.

Some of the pages just include broad declarations of support for struggling consumers along with information on how to contact the financial institution to ask for help. Others are more detailed and offer concrete steps for how to get the help you need.

Here are a few examples of what these pages include:

  • Bank of America’s homepage includes an easy-to-find link to a page where you can request a payment deferral.
  • PNC Bank offers a prominent link to a hardship-program request form.
  • Fifth Third Bank explicitly says, “We are offering to waive the monthly payment requirement on Consumer Credit Cards for up to 90 days with no late fees” and provides detailed information on how to apply for hardship.
  • Citi specifically refers to possible fee waivers and collection forbearance offerings.

Many other issuers offer little to no detail on what their hardship programs might include.

Your mileage can clearly vary by issuer — further proof of just how important it is to call your credit card issuer to ask for help rather than relying on the institution’s web offerings.

That’s not to say issuers’ websites can’t be valuable, though. With that in mind, here’s a collection of links to the coronavirus information pages for some of the nation’s largest issuers:

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