Protecting Your Finances During COVID-19

As businesses shut down and shelves clear of supplies, here’s what you need to do to keep your finances healthy.

The coronavirus has already had far-reaching effects on the global economy and our stock market. But even if you’re not invested in domestic and foreign markets, there are financial concerns much closer to home that this global pandemic can cause. These financial tips can help you keep your finances in working order.

Making sure your finances stay healthy

Short-term financial tips

Banks, credit unions, and credit card companies are all sending out announcements about how their operating procedures may change. Your inbox is probably flooded with coronavirus subject lines, but you need to pay special attention to any that come from your financial providers.

They may include updates about when branches may open and close and what services will be offered. Most financial service providers are encouraging people to use online and mobile services. For example:

  • Instead of going to the bank to deposit any checks, use mobile deposit (when possible)
  • Sign up for autopay or direct debit from your accounts to pay bills
  • Many companies are encouraging you to use online chat to speak with representatives if you have questions or issues with your accounts

Most credit card companies and lenders are also encouraging customers to contact them if they’ll have trouble making their payments. Companies recognize that everyone from hospitality workers to teachers may see their income significantly reduced during this time. They recognize that this may cause people to fall behind on monthly payments.

Instead of avoiding a creditor or lender if you believe you’ll have trouble making a payment, contact them immediately. They may be able to help you make temporary arrangements to reduce or even pause your payments until your income returns to normal.

Depending on where you live, stores may be running out of everything from surgical masks and hand sanitizer to toilet paper and food. It’s tempting to get swept up into thinking you need to buy up everything you can before it’s gone. However, this is counterproductive for a few reasons:

  1. Panic purchasing leads to shortages, which on items like surgical masks means that people who actually need them can’t find them (making the spread of the virus worse)
  2. You’re also likely to rack up credit card debt buying a bunch of items that you may or may not even need.

Going back to your inbox, stores are also sending out notifications about their operating hours and what they’re doing to ensure products stay stocked. If your stores plan on staying open, then there’s no need to rush out and start overspending over concerns for closures that may never happen.

If you are shopping, make sure to be practical. Take proper measures to protect yourself while shopping, such as wearing gloves while you shop to avoid touching the cart or using hand sanitizer if it’s provided at the front of the store.

If you’re following the advice to stay at home as much as possible, then you’re going to need things to do to keep yourself entertained. Take a break from streaming and watching COVID-19 headlines to improve your financial savvy!

April is National Financial Literacy Month, which means that many organizations are going to be offering free financial resources. Learn how to be smarter about budgeting, how to start investing and smarter strategies for managing debt.

If you aren’t sure where to start, hit up Consolidated Credit’s Financial Resource Center and start learning.

Long-term financial tips

The long-term economic effects of COVID-19 may be far-reaching. It is possible that it will trigger another global recession. With that in mind, it’s important to shore up your finances against long-term economic instability.

Taking on credit card debt in an unstable economy is a risky proposition. The last thing you need is higher bills that will eat up more of your budget. You need to free up as much cash flow as possible to pad your savings.

You should review your budget carefully to find any expenses that you can afford to cut or cut back. This will help reduce the total expenses in your budget, leaving more income to save and pay off debt. It will also help you avoid the need to make new credit card charges.

An economic downturn could lead to higher unemployment, which means less job security for everyone. In this type of volatile economy, it’s best to take steps to reduce as much debt as possible. This eliminates bills that you need to worry about and debt payments that are eating up income.

The best way to reduce existing credit card debt is by using an avalanche or snowball strategy for debt reduction. You prioritize credit card balances for repayment from either highest to lowest APR or lowest to highest balance.

If you owe more than $10,000, then you may need to consider a more aggressive strategy to get out of debt. Look into options for debt consolidation or contact a credit counselor to discuss your options with a certified professional.

During a normal economy, experts recommend that you should save 3-6 months of bills and other budgeted expenses. This allows you to weather a period of unemployment or cut hours at work without relying on credit cards.

During an economic downturn or more severe financial upset like this, you should expand your financial safety net even further. Ideally, you want to have 6-12 months of savings built up to cover you. This will help you cover any cut hours or loss of businesses that COVID-19 may end up causing.

Watch out for these coronavirus scams!

While most of us are coming together to support each other during this time, others are using this as an opportunity to scam people. Please watch out for these types of scams and report them if you encounter them.

On March 27th, Congress and the White House passed a historic $2 trillion stimulus package. Part of that package is designated for providing stimulus checks directly to people.

However, even before the stimulus package passed, scammers had already begun contacting people with false stimulus check claims. The messages attempt to trick you into providing data, such as account numbers and PINs to receive your stimulus check.

If you receive text messages, robocalls or emails that ask you to reply regarding stimulus checks or government grants that you can receive, it’s a scam.

The government plans to issue stimulus checks through the Internal Revenue Service and Social Security Administration Office.

  • If the IRS has your bank routing information for direct deposit from your 2018 or 2019 tax return, the money will be deposited directly into your account.
  • If you have your refund delivered by physical mail, the check will be sent to the same address.
  • If you receive Social Security benefits or SSI and did not file tax returns, the checks will be sent via the same system that you receive your payments

Stimulus checks should arrive in April. You can find more information about what you can expect to receive below.

Some scammers will try to impersonate your bank or credit union.[1] The messages say things like, “Operations have been suspended. Please provide your debit card number and PIN to ensure you can continue to use your account.”

Note that your bank will never ask you to send them a full amount number. Neither will credit card companies. Never give out account numbers, PINs or your Social Security number.

Coronavirus testing kit shortages are well-reported and people are understandably concerned. However, if you receive text messages, voicemail or emails regarding paid testing kits, it’s a scam. Instead of getting a testing kit, you’re simply giving them access to your accounts.

Note that if you receive text messages about this, delete them with no response. Do no even follow instructions to opt-out.

Another paid offer you may receive is for cleaning services, specifically HVAC and air duct cleaning. If you did not inquire with a cleaning company and you begin to receive unsolicited messages or emails, ignore them. Don’t opt-out, don’t respond with anything. Just hit delete.

If you’re trying to help those less fortunate than you through this time, you also need to be cautious of charity scams. One easy way to tell the difference between a legitimate charity and a scam is how they ask for donations. Scammers rely on gift cards, cash, or wire transfers.

Research any charity that you don’t recognize carefully online before you donate. And be cautious even if you recognize the name of the organization. Scammers are impersonating the World Health Organization now. Donating directly through secure websites for charities, such as the WHO’s portal is the safest option right now.

Important government updates

Government agencies are working with the White House and Congress to ensure Americans can get financial relief during this time.

The federal government passed a landmark $2 trillion stimulus package on March 27, 2020. Part of that sum will go directly to individuals and families who meet certain requirements. The amount you receive depends on your situation.

  • An individual who makes less than $75,000 annually will receive $1,200
  • If you’re a single parent who claims Head of Household on your tax returns, you can make up to $112,500 annually and receive $1,200
  • A married couple who makes less than $150,000 annually will receive $2,400
  • Married couples and heads of household will receive an additional $500 per child under the age of 17 in the home

People who make more than the annual totals listed above may still receive money. The Washington Post has a full list of rules and a free stimulus calculator.

The payments are set to start going out the first week of April. However, delays may happen and checks may be sent in matches. Experts warn it could take up to 8 weeks to receive your money, even if everything starts on time.

Checks will be sent through the Internal Revenue Service and Social Security Administration. Eligible Americans will receive their funds via the same method they receive their tax refunds or Social Security benefit payments.

The IRS has extended both the tax filing and the payment deadline for 2019 income tax returns. You are not required to file your annual tax return until July 15, 2020.[2] If you owe money to the IRS, the payment needs to be made in full by July 15 before penalties and interest will start to apply.

Tip: If you won’t owe money to the IRS and should receive a refund, don’t procrastinate! You can file now and receive your refund via Direct Deposit within roughly 21 days. That money could help you get through quarantines and income reductions caused by COVID!

On March 13, President Trump announced that all federal student loan payments would be suspended for 60 days. The government is also waiving interest charges during this time, regardless of whether you have subsidized or unsubsidized loans.[3]

It’s important to note that payment suspension is not automatic. You must contact your lenders to suspend your payments. However, if you decide to make your payments now there is a small bit of good news. Since interest is being waived, 100% of any payment you make will go towards the principal balance you owe.

Some states and counties are suspending shutoffs of utilities, such as power, gas, electricity, and water. State and municipal governments have stepped up and stepped in for many residents to prevent utility companies from shutting off services due to nonpayment.

It’s important to note that this is not a federal order. You need to look for information on your state and county to see if shutoffs have been suspended. If so, your utilities will not be cut off simply because you can’t pay your bill.

The $2 trillion stimulus also included $349 billion in relief for small business owners via federally-guaranteed, tax-free loans.

  • Any business with less than 500 employees is eligible
  • So are sole proprietors, independent contractors and self-employed individuals
  • Businesses owned by Veterans, women and socially and economically disadvantaged individuals, as well as those in rural areas and those less than 2 years old have priority for receiving funds
  • The loan is fully forgivable for eight weeks starting February 15 and ending June 30
  • Your business can receive up to two and half times your monthly operating costs

Forbes has a great article that covers all the rules, application and repayment exemptions a business needs to know.

Consolidated Credit’s counseling team is here to help!

Due to public health safety concerns, we have canceled all upcoming financial education workshops until further notice. However, all our online events are still going to be held, so we encourage you to sign up and join us!

Our certified credit counseling and client services teams are still available to help. You can call to receive free credit counseling at any time. Counselors can help you address any challenges you’re facing with your budget and credit card debt. If you’re already a client, our client services team is on call and available to help with any account issues you may be having.

Written by :
Meghan Alard [email protected] Financial Literacy Specialist

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April Lewis-Parks
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