The Coronavirus Pandemic is causing financial hardship for many Americans, even forcing some to put important bills like rent on their credit cards. This could cause a massive increase in credit card debt when the pandemic is over.
More Americans Charging Rent
There is a 70% increase in Americans paying rent on credit cards during COVID-19 compared to last year, despite programs preventing evictions during the pandemic. Paying your bills with your credit card, or multiple credit cards, may be a good idea if it is temporary and you know you will have the money to pay in full when the bill arrives.
Americans paying their rent on credit cards have often exhausted all their other options, such as savings, federal programs, and help from friends and family. They may be at risk of eviction, so they are choosing credit card debt over losing their homes.
While incurring excessive debt is never a wise financial choice, during an emergency such as COVID-19, many are being forced to do so just to survive. With many Americans forced to choose between credit card debt and homelessness, carrying a balance may seem like the only option.
Ways to Lower Expenses Before Using Credit Cards
With so many still waiting to receive unemployment benefits, some Americans are unable to pay their credit card bills at all. This is when paying the rent on your credit card becomes a problem. Interest rates and late fees can stack up quickly and significantly increase your debt.
If you do choose to rack up credit card debt, there are some steps you can take to keep it under control as much as possible. Before you pay your rent with your credit card, you should:
- Lower your bills as much as possible. Cancel unnecessary subscriptions and only buy the essentials. This way, when you have the money to pay down your credit card, you will pay less in interest since the principal is smaller.
- Make sure it is your only option. Credit card debt can impact your financial life, even in the future. Missing credit card payments will negatively impact your credit score which can make getting loans or applying for credit cards in the future difficult.
- Take full advantage of COVID relief programs. With much of the country in a state of emergency, some creditors are offering temporary relief programs to help with the bills. For example, they may let you defer a payment, or waive a late fee during the pandemic, but keep in mind, even if you are able to defer a payment, interest usually will continue to accrue.
Where to Find COVID Debt Relief
Once you start missing payments, your debt can spiral out of control quickly. If this happens, you don’t have to go through it alone. Debt settlement companies, such as ClearOne Advantage, have programs that can help you lower the total amount you owe and the amount you are paying out each month for your debt.
Debt settlement is usually best for those who have more than $10,000 in unsecured debt with a steady income. Your Certified Debt Specialist will work with you to create a customized debt relief plan with a single monthly payment designed to fit your budget and which is usually significantly lower than your previous payments. ClearOne Advantage’s skilled negotiators will then work with your creditors to settle your debts for less than the full balance of what you owe.
If you are in credit card debt, it could take more than 15 years to pay it off just making the minimum payments. With debt settlement, you could be debt-free in as little as 24 - 48 months, and at a much lower cost.