Credit Cards & Coronavirus FAQs
If your card company agrees to defer payments due to the pandemic, those payments should not be reported to the credit bureaus as late and will not affect your credit score. But if your balance increases during the deferral period, it can affect your score. Be sure to raise the issue of reporting when speaking with your card provider. Even without a formal plan, the company may agree to put a note in your file indicating that the late payments are due to the coronavirus.
You can also take steps to protect your credit health yourself, such as filing a brief notice called a consumer statement with the credit bureaus. Here’s an example: “The negative accounts on my credit report are related to the coronavirus. I intend to catch up with them as soon as possible. The Federal Office for Financial Consumer Protection has issued advice on protecting your credit during the coronavirus outbreak, just like the three major credit bureaus, Equifax. Experiential and TransUnion.
Credit bureaus also make it easier to monitor your credit status. Until April 2021, you can check your credit report once a week for free on the authorized website AnnualCreditReport.com. Typically, Equifax, Experian, and TransUnion each offer one free credit report per year.
What if the card company says I am not eligible for a hardship program?
There are other ways to try and lower your credit card bills during a tough time, but they come with caveats. Consider them carefully in light of your current and future financial situation.
Ask for a lower interest rate. The worst your issuing company can do is say no. If they say yes, your monthly finance charges will go down. But watch out for third-party companies that promise to negotiate a lower rate for you. They can lead a scam by charging high fees to do things you can do yourself for free.
Review balance transfers. You may be able to transfer what you owe on one card to another that offers a lower rate. But many cards charge a transfer fee, usually 3-5% of the transferred amount, which could offset your interest savings.
Explore the cards with 0% interest rate promotions. Many companies offer cards with 0% introductory rates – you pay no interest on purchases or transfers for a set period of time, usually the first 12-21 months. (You still need to make minimum monthly payments.)
But any purchases you don’t pay for during this time will start earning interest upon completion, often at fairly high rates. You may even be charged retroactive interest if you get what is called a “deferred interest” card. Make sure you are clear on what happens after the introductory period and consider whether you will be able to pay off the full balance before the end.
You can compare balance transfer and interest-free card offers on consumer credit sites like The bank rate and Nerdwallet. Keep in mind that opening new credit card accounts can affect your credit score.
Are card companies tightening lending?
Lowering credit limits is a way for lenders to minimize risk during times of economic uncertainty, when customers may find it more difficult to pay off their card balances. Many banks tightened loan limits in the early months of the pandemic, according to Federal Reserve surveys of loan officers, but conditions were easing in early 2021.
Card companies are more likely to restrict credit if you increase your spending on a card or seek help if you’re having trouble. In most cases, they don’t have to tell you in advance that they are lowering your credit limit. (An exception is if the move would cause you to exceed the limit, in which case you must get 45 days’ notice.) A reduced limit can affect your credit score, which takes into account how close your balance on a card is to the expenses. ceiling.
If a card company lowers your credit limit, you can ask them to reconsider their decision. Even if they haven’t made any changes, you can request a higher limit; several issuers have said they will consider increasing limits for customers who rely more on their cards during the crisis.
I got a call from a credit card company who offered to help me with my bills. What should I do?
Be skeptical, especially if the call was unsolicited and asked you to provide personal information like your credit card or social security number. This is a sure sign of a scam. The same goes for a text or email claiming to be from a card provider.
Authentic communications from your credit card issuer will not request sensitive information. Posts that do this are almost certainly phishing scams seeking to collect personal data for identity theft. Do not respond or click any links or open attachments, which could transmit malware to your device.
If you believe a communication from your credit card provider is fraudulent, report it to the business using a confirmed phone number or online contact method, and file a complaint with the Federal Trade Commission.
Editor’s Note: This article, originally published in March 2020, has been updated with new information.