Efforts to stem the spread of the coronavirus with shelter-in-place orders and closures of all but essential businesses have cut many workers' income. Those who have lost jobs or hours since the COVID-19 crisis hit face a lot of tough financial decisions.
One of those is how to make regular bill payments. The good news is that credit card issuers are responding to the crisis with help for people in distress.
If you contact your credit card issuer, you may be able to delay your upcoming payments. But you need to get in touch because payment waivers are not automatic.
"Where we are today is something we've never experienced before," says Rod Griffin, senior director of consumer education and awareness at credit bureau Experian. "We're all trying to figure it out."
Here are some tips on how to handle credit card payments if your income is hurt by the coronavirus.
What Are Credit Card Companies Doing to Help?
Credit card issuers urge customers affected by the coronavirus to reach out if they are having financial problems. In some cases, issuers are offering relief.
Here are a few examples:
-- Citi cardholders can request credit line increases and use forbearances, meaning payments could be missed for a period of time without penalties.
When you contact issuers, try to assure them that you're working on paying as much as you can to preserve your positive credit record.
What Are the Three National Credit Bureaus Doing to Help?
The major credit bureaus, Experian, Equifax and TransUnion, are taking steps to help consumers weather the coronavirus storm.
Lenders must notify the bureaus if a customer has been placed in a special program, such as a forbearance or deferred payment plan, states a March 2020 report by the Consumer Data Industry Association. The notifications ensure that these programs will not hurt consumers' credit reports, according to the association, which counts credit bureaus as members.
Both FICO and VantageScore have publicly stated that people in forbearance or deferred payment plans will not see their credit scores suffer as a result. Still, check your credit report from each credit bureau, which you can do for free at AnnualCreditReport.com and elsewhere.
"Know what's in that report," Griffin says, because "credit history is going to be important as we move forward."
But don't obsess about it, he says. Your priorities should be taking care of your family and your health, and then, if necessary, talking to lenders about how to protect your finances, Griffin says.
Credit scores "should not necessarily be at the top of the list," he adds.
[Read: Best 0% APR Credit Cards.]
Why Are Missed Credit Card Payments a Problem?
Missing a payment is one of the worst things you can do to your credit score. Late payments have an immediate and lasting effect.
A late payment can lead to:
-- Late fees. Credit card late fees could be as much as $39, depending on your credit card issuer. If you are a longtime cardholder and haven't missed a payment for quite awhile, if ever, you might be able to contact the company and get your fee waived. If this is likely to happen again, you will need to figure out a plan with your creditor.
-- Damage to your credit report and score. Late payments are reported to the credit bureaus once they're at least 30 days past due. You can avoid some of the worst effects if you miss a payment by just a few days.
Late payments stay on your credit report for seven years. Your credit score is based on your credit report, and payment history is a key factor both for FICO and VantageScore credit scores.
What Should You Do if You're Going to Miss a Payment?
Talk to your creditors if you're going to miss a payment, especially if you will miss more than one. Some people might be too scared or embarrassed to discuss their finances with creditors, but not asking for help isn't a good long-term plan.
"That's the worst possible option because lenders and businesses are expecting us to be partners through this process," Griffin says. "You need to talk to your lenders because they won't otherwise know what you're going through."
Don't be reluctant to call if, say, you lost income and don't know when you can make ends meet again.
"Banks realize a lot of people are being put out of work or on reduced hours as a result of virus-related shutdowns," says Pete Klipa, senior vice president of creditor relations at the National Foundation for Credit Counseling. The nonprofit group, also known as the NFCC, provides a coronavirus financial toolkit with resources for managing your finances during the COVID-19 crisis.
Before you call or reach out online to your credit card issuer's customer service department, organize your thoughts. Take detailed notes about your situation that you can refer to before you call so you'll remember everything you need to bring up during the conversation.
"You want to be able to tell that story in such a way that a bank understands and can react," Klipa says. Reaching somebody by phone might take awhile, "but they'll get to you and want to talk to you."
Banks are adjusting to closed offices and social distancing in their customer service departments as well, which can make handling the high volume of calls tough for them, Klipa says. That's why online outreach -- through email messages, apps or website chats -- might be easier and quicker than calls.
Whatever you do, talk to creditors before you miss a payment. "They may be able to do some things to mitigate (your) concerns and help you with those issues," Griffin says.
If your situation changes after you make arrangements with creditors, let them know.
Should I Talk With a Credit Counselor?
If you're overwhelmed by the idea of missing credit card payments, a certified credit counselor could help you manage negotiations with all of your credit card companies. You can find NFCC-certified agencies on the nonprofit's website, or you can ask for recommendations from a lender, friend or family member.
Credit counseling agencies are in constant contact with credit card issuers and may be able to create a payment plan for you. Rather than reach out to your issuers and negotiate separately with each one, Klipa says: "It does make a lot of sense to handle that in a holistic way with one call."
If you don't need to negotiate with issuers but could use help setting up a leaner budget, a credit counselor can do that. A counselor could also recommend a debt management plan.
[Read: Best Cash Back Credit Cards.]
What Are Other Ways to Avoid Missing Credit Card Payments?
If you move some of your debt to a balance transfer credit card or pay off some of it with a loan, you won't have to manage quite as many bills. Just make sure you're not creating more financial stress if you're choosing one of these options:
Balance transfers. Shifting credit card debt to a balance transfer card can give you one payment with 0% interest during the card's promotional period. But realize that a 0% interest deal is temporary, and you'll still need to make a monthly payment.
Also, if you miss payments on a 0% interest card, you could lose the bonus rate.
Home equity loans . A home equity loan or line of credit can allow you to pay off credit card bills at a low interest rate. You'll make one monthly payment at a lower interest rate than if you paid your debts separately.
Just keep in mind that if you use up your home equity line of credit to pay off credit card debt, you won't have it for more urgent needs.
Regardless of how you handle financial hardship amid the coronavirus crisis, try to pay your bills on time when you can, and know that creditors can help, Griffin says.
"There's too much going on that's out of our control as consumers and businesses right now to be embarrassed about asking for help," he says. "We're all trying to work through this together."