We know these are worrying times, so we want to help you focus on just the things that are in your control for your own peace of mind.
1. Understand what you’re paying in interest across your products
It’s important to know how much interest you’re paying on the debt you currently have. Your interest rate might be found on letters or emails you received when you were approved. You should also be able to find that information by logging into your online account through the lender’s website or app, or by giving them a call.
The goal here should be to think about how you might be able to move more expensive debt with higher interest rates to more affordable options that offer lower interest rates.
Paying a lower interest rate on debt could save you a significant amount of money over time. But remember, you always need to check whether your existing lender allows you to transfer your balance to a different lender and whether any fees apply from the existing lender or the new one.
Here’s some resources you can review:
- Intuit Credit Karma guide to debt
- Credit Karma guide to finances for disaster preparedness
- Debt consolidation: Tips to pay off debt with less interest
2. Ask your lenders about taking a payment break – online or by phone
If you need some relief from your debt, contact your lenders. Asking for a break from making payments can help you find some breathing space. But it’s important to remember that although you won’t be making payments, interest will still apply during any breaks you arrange. Then, you’ll need to make arrangements to resume paying at some agreed point in the future.
Most lenders have made it so that you can ask for a payment break online, and they’ve made it clear that taking a break won’t hurt your credit score.
Make a note of the different payment breaks you’ve agreed with your lenders. And during each break, prepare to start paying again, because missing payments after any payment break ends will hurt your credit score.
You could even set up a direct debit to start the month after your payment break ends, to make certain you get that first payment in.
3. Think carefully about applying for new low-rate credit
If you’ve looked at all your interest rates and thought carefully about whether you can save money by moving debt to products offering lower interest rates, the next potential consideration is whether to get a low or even introductory 0% interest product to save even more money.
Normally, products like 0% balance transfer credit cards can be a great option for reducing the cost of your debt. But at the moment, the economic uncertainty caused by the coronavirus pandemic has forced many lenders to start restricting who they lend to or withdrawing some products from the market altogether.
This means a couple of things. The first is that the products you can get today – like cards and loans – might not be available in the future. And the second is that you have to think very carefully before you apply for a credit card or loan, because lenders are being more strict on who they’ll approve.
Our marketplace can help with this uncertainty, because we show you how likely you are to be approved before you apply. This can be useful in helping you decide what’s worth applying for or whether it’s better to leave it for now.
Remember, searching on our marketplace doesn’t hurt your credit score, but being rejected when formally applying with a lender can.
4. Protect and grow your credit score for the future
When we come out on the other side of this outbreak – and we will – you’ll want your credit score to be in the best place it can be.
Part of the battle is protecting your score through this difficult period, doing all you can do to ensure you don’t miss payments or apply for too many new products in a short space of time.
Remember, you can always check your credit on the Credit Karma website and in the app, along with a range of different things that have an impact on your score. Dig a little deeper and you’ll see guidance on what you can do to maintain your score and keep it growing.
Take some time to figure out which steps are realistic for you right now, given everything that’s going on. It’s not worth over-stretching yourself, but there could be some little wins in there to keep you ticking over.
Here’s some resources you can review:
