So you’re stuck at home.
Your hours at work may have been reduced or experienced a layoff already.
Your weekends are no longer filled with social activities.
Restaurants are closed. Bars closed. Gyms closed.
Perhaps, you find that you’ve dramatically reduced your discretionary expenses.
But at the same time you may find yourself in a financial hole due to a reduction in your work hours or complete layoff.
In light of these unforeseen circumstances that we currently find ourselves in, what can you do to manage your finances during the coronavirus pandemic and see yourself through?
If you’ve been affected by COVID-19, ask your financial services provider for help
A number of major banks and credit card companies are now starting to introduce measures to help beleaguered customers.
Amex has also agreed to similar measures, allowing for interest charge and late fee waivers for those impacted by COVID-19 and seeking relief. However, according to an article published by personal finance blog the Points Guy, your accounts may get frozen and may not be used until any remaining balance is paid off, which may be an inconvenience for some of our Amex users. We suggest speaking with Amex’s account services before accepting any form of COVID-19 relief.
Other financial institutions, such as Chase and PNC, have encouraged outreach from its customers to discuss options for assistance.
For a comprehensive list of banks providing COVID-19-related relief, check out this article by Forbes.
Outside of directly asking your bank and/or credit card provider for assistance, you can see what prior money can be retrieved from bank fees. There is no better time than now to ask for refunds on your bank fees, especially if you are currently undergoing unforeseen financial difficulties due to COVID-19-related extenuating circumstances like job loss, a reduction in your hours at work, and so on.
Take advantage of offers of relief by businesses
A number of businesses and most major utilities such as Comcast and AT&T, to name a few, recently decided to introduce offers of relief to help minimize the potential and existing impact of COVID-19 on its customers. ConEd in NYC, along with most major gas and electric utility companies across the country for instance, have agreed to forgo shut-offs for non-payment. What this could mean for you could be additional monthly savings or a temporary reduction in your expenses so be sure to be on the lookout for any COVID-19 related initiatives that may apply to you.
We’ve put together a continuously updated list of resources and information from companies offering relief for their customers.
Consider refinancing your debt to generate additional monthly savings
With interest rates near zero, now is the time to refinance any existing debt you might have, whether that’s an auto-loan, credit card debt, student loan or mortgage.
According to Bankrate, mortgage rates have already fallen from around 4.5% on a 30 year fixed rate mortgage to under 4%.
However, if you are a homeowner, refinancing now may not be the best move given that mortgage rates typically lag behind any changes in interest rates and as of now, lenders are already overwhelmed with mortgage applications, meaning that rates may remain stable for now and not reflect the impact of lowered interest rates.
With credit card debt, now is probably the best time to look into a balance transfer, which is when you transfer an existing credit card statement balance from one card to another card to benefit from a lower interest rate on that debt. For more on the details behind a balance transfer, check out our article on reducing your APR, which touches briefly on the topic.
If you have a car loan, now may also be the time to explore refinancing it (Business Insider provides a great overview of the steps behind refinancing a car loan). Previously at APRs of around 6%, car loans are now advertising APRs of as low as around 4.5%
If you have student loans, you may also be able to save more of your monthly income by refinancing them. Although enticing, however, do realize that there are potential downsides to refinancing your student loans even if it means additional savings.
Rebuild your finances (if you can)
If at all possible (that is - if your income has not been affected and you find yourself spending far less than usual on discretionary expenses), now is the time to start a rainy day fund.
Now may also be the time to re-evaluate your budget and question every discretionary spending decision. If you live in a major American city, chances are restaurants, bars and other entertainment venues have already shut down, potentially leaving you with a surplus of disposable income.
With that surplus in view, perhaps now may be the time to give some thought to how much more you could be potentially saving.
As a last resort, consider taking out debt
If you find yourself in a position where you simply cannot make ends meet due to job loss, you should consider, as a last resort, taking out debt. With interest rates at record lows, if debt appears to be the only means for you to make ends meet, do consider looking into signing up for a personal loan or a new credit card.
To prepare against the full economic impact of the coronavirus, as with everything in personal finance, try to get a sense of where you stand in terms of expenses and income. If you find yourself with additional savings due to relief being provided by businesses or due to reduced discretionary spending on restaurants and other entertainment venues, try to resist the temptation to spend said savings. Instead, hold on to those savings, and think about ways in which you can use it to build your financial future. If you find yourself struggling due to a reduction in your income, try to temporarily decrease your expenses by taking advantage of any relief efforts that may apply to you. If you can find additional sources of income, try to do so. If not, and if you can no longer manage to pay off even basic expenses like rent, consider enrolling in a financial hardship program with your financial institution.
The basic rule to follow? Optimize for cash flow.
Harvest helps increase the net worth of the 99% through artificial intelligence and financial automation. To date, Harvest has refunded over $2M in bank fees and interest charges to its members with the ultimate goal of increasing the net worth of everyday Americans by $1 trillion by 2030. Our platform starts with providing immediate relief through bank fee and interest charge refunds, orients a member's financial health with our proprietary PRO Index™, and keeps track of net worth over time aided by our suite of financial tools. Check out our 8-step guide on "How to Build Wealth from Nothing" to get started on increasing your net worth.
Disclaimer: Harvest is not providing financial advice. The content presented does not reflect the view of the Issuing Banks and is presented for general education and informational purposes only. Please consult with a qualified professional for financial advice.