While politicians continue to debate the new stimulus package, millions of Americans are barely getting by. Many people found themselves without a job and had no choice but to make poor financial decisions to survive. Some people stopped paying rent, mortgage, utilities, and car notes. Others started relying on credit cards and retirement accounts to cover the bare necessities.
Thinking that the pandemic would pass quickly, they continued these practices to the point of financial demise. Now, a year later, many people are dealing with no emergency funds, maxed out credit cards, and ruined credit. Unfortunately, many fear having their homes foreclosed on, getting evicted, or being on the hook for large utility bills. Looking for a way to regain some stability (and their sanity), some consumers turned to COVID Debt Consolidation for solutions.
Tackling Credit Card Debt
When your credit card is maxed out, you’re missing payments, and the interest and penalties keep piling up, it’s time to devise a plan. You have several options available. What you chose ultimately depends on your circumstances.
- Contact Creditors – There’s a wide misconception that you shouldn’t reach out once you owe a company money unless you’re ready to pay. However, that’s not the case. Creditors understand what’s going on in the world right now, meaning they’re more inclined to want to work with you. You can ask about lowering interest rates, removing late fees, and organizing a more affordable repayment plan.
- Crunching Numbers – Paying more than the minimum amount is another efficient way to get credit card debt under control. While it may appear you don’t have the money to afford higher payments, that’s not always the case. Many consumers found that when they created a realistic budget and eliminated wasteful spending, that they had extra money, they could dedicate to credit cards.
- Balance Transfer Cards – There are credit cards that allow consumers to transfer balances. These cards often start cardholders off with no interest, which gives them the chance to pay down the principal balance faster. There are a few things to keep in mind. You must have decent credit, and you’ll have to pay the balance off within the promotional period, or you’ll be stuck with a high balance and interest rates.
- Debt Consolidation – Companies like COVID Debt Consolidation offer low-interest loans to individuals interested in paying off high-interest credit cards. Their outstanding accounts get lumped into one, make it more affordable and easier to manage.
Relief In Other Areas
Although credit card debt was only part of American consumers’ financial stress, getting things under control provided relief in other areas.
- Better Financial Management – With a system in place to tackle credit card debt, people started applying financial management practices to other areas. Creating a realistic budget to free up cash and sticking to their payment plans got positive results. Their credit improved, they got smarter about their money, and they paid down balances faster.
- More Money For Necessities – Whether you contact your creditor to create a more affordable payment plan or you opt for debt consolidation, you’re saving a ton of money in interest and late fees. These financial savings were ultimately applied to other necessities.
- Peace of Mind – There’s something about paying down debt and managing your finances that gives you a sense of security. You’re not worried about collection calls, your credit history turns around for the better, and you have money to get things you need.
Financial stress has reached an all-time high since the start of the pandemic. As people do what they can to survive, they consequently create more problems later. Feeling as if they were drowning with no way out, they turned to methods like those discussed above to tackle credit card debt. Learning how to reduce financial pressures and develop positive financial habits ultimately helped many Americans. They saw a positive change in their credit history, eliminated the chaos, used savings to cover other expenses, and found peace of mind.