The COVID-19 pandemic has fundamentally shifted local, federal, and world economies. Millions are out of work, others are closely monitoring the situation while working from home, and the economic volatility adds another layer of stress to this already uncertain time.
But one way to cope is to take control of your finances. Here are some ways to do that.
Financial expert Clark Howard recommends putting your most basic needs, including food and shelter, before any other bills now. Make sure you can feed your family before using your limited resources for loan payments or credit card bills. Similarly, your family needs a place to live, so mortgage or rent payments should be next on your list.
On March 18, 2020, President Donald Trump announced he’s instructing the Department of Housing and Urban Development (HUD) to immediately halt “all foreclosures and evictions” for 60 days.
Also, in early March, the Federal Housing Finance Agency offered payment forbearance to homeowners affected by COVID-19, allowing them to suspend mortgage payments up to 12 months. These loans account for approximately 66 percent of all home loans in America. Suspended payments will eventually need to be repaid, though conditions for repayment vary by lender. Speak to your lender about your options before making a decision.
If you’re a renter, be open with your landlord. They may be willing to work with you.
How SAFE can help: If you are facing financial difficulties due to COVID-19 and are unable to make your SAFE mortgage payments, please contact our mortgage servicing team to request mortgage payment deferrals. Call: (800) 701-4115 or email lossmitinquiry@DMIcorp.com.
Paying for transportation
Missing an auto loan payment can mean risking repossession of your vehicle. This should put car payments next on your list of financial priorities. If meeting that monthly payment is impossible right now, it’s best to communicate with your lender and come up with a plan that is mutually agreeable to both parties.
How SAFE can help: Request vehicle loan payment deferrals through our Skip-A-Pay program. You can access this online by logging in to your account, choosing Additional Services > Skip a Pay. Please note that finance charges will continue to accrue during the deferral period and for loans, total finance charges and number of payments may be higher than originally disclosed. For SAFE vehicle loans, personal loans and credit cards, you may request deferring up to two payments. To be eligible, the loan/credit card must be at least six months old and not more than 45 days past due at the time of your request. Under the pandemic response program, there is no fee, and former skipped payments do not impact your ability to participate.
Utility and service bills should be paid on time each month, but for workers on furlough due to the coronavirus pandemic, these expenses may not even make it to their list of priorities. Most states have prohibited utility shutoffs for now. Also, many providers are willing to work with their customers. Visit the websites of your providers or reach out to them by phone to see what kind of relief and financial considerations they’re offering consumers.
Unsecured debt includes credit cards, personal loans, and any other loan not tied to a large asset. Clark Howard reminds borrowers that missing out on a monthly loan payment can have a long-term negative impact on a credit score. Here, too, consumers are advised to communicate with their lenders about their current financial realities to see what options are available.
How SAFE can help: Request loan payment deferrals for your SAFE credit card and personal loan accounts through our Skip-A-Pay program. temporarily expanded in response to the COVID-19 crisis. You can access this online by logging in to your account, choosing Additional Services > Skip a Pay. Please note that finance charges will continue to accrue during the deferral period and for loans, total finance charges and number of payments may be higher than originally disclosed. For SAFE vehicle loans, personal loans and credit cards, you may request deferring up to two payments. To be eligible, the loan/credit card must be at least six months old and not more than 45 days past due at the time of your request. Under the pandemic response program, there is no fee, and former skipped payments do not impact your ability to participate.
Historically low interest rates can be beneficial for borrowers but can reduce dividends on savings. Find SAFE’s current rates here.
Dividend and interest rates on certain savings accounts and products such as certificates are likely to be reduced. But there are still ways you can help grow your savings.
- Route part of your direct deposit into a savings account. Even a little each paycheck can add up over time.
- Recurring transfers. Set up automatic recurring transfers from your checking to your savings account to make saving money easy.
- Establish a budget and find ways to save. You can use a budgeting tool like SAFE’s Money Management Tool to get an overall view of your income and expenses to find ways to carve out savings.
How SAFE can help: We offer a variety of savings and money market accounts to help you maximize your savings. You can also set up a Perfect Cents Savings® account where purchases made with your SAFE debit card are rounded up to the nearest dollar. At the end of each day, that “change” is deposited into a SAFE savings account.
Credit cards with adjustable rates based on the prime rate will see a rate reduction starting in the coming months. Check your credit card accounts to see what your new rates are.
How SAFE can help: SAFE is offering 0% interest for six months on balance transfers made to SAFE credit cards for existing card holders. We also offer competitive rates on all our credit cards, including Cash Rewards and Platinum Rewards.*
* Promotional rate on new balance transfers applicable for 6 months from date of balance transfer. Thereafter, rate adjusts with the market based on prime rate. APR is variable, ranges from 8.49%-18.49%. Rates accurate as of 3/18/2020. APR is determined by your credit history. Cash Advance: Either $10 or 3% of the amount of each transfer, whichever is greater. Late Payment Fee: $15 or the current minimum payment amount, whichever is less. Returned Payment Fee: Up to $10. Foreign Transaction Fee: Up to 1% of each transaction in U.S. dollars (only applicable to Cash Rewards and Platinum Visa Credit Cards). Rates, terms, and conditions subject to change.
Mortgage and refinance rates are also lowering as the bond rates they’re tied to fall. Many homeowners are using this opportunity to refinance existing mortgages to save on monthly payments, or get funds to consolidate debt or make home improvements.
Coronavirus Aid, Relief, and Economic Security (CARES) Act
The $2 trillion stimulus package includes a number of ways to help people financially during this crisis.
Many taxpayers will receive a $1,200 stimulus payment in the coming weeks. Single people with an adjusted gross income of $75,000 or less will get the full amount, as will heads of households (single parents) who earn $112,500 or less. Married couples who earn less than $150,000 will get $2,400. And families with children under 17 will get an additional $500 per child. The payments will be made through direct deposit into the bank account on file with the IRS from previous tax refunds. If they don’t have a bank account number for you, the Treasury Department will mail you a check. If the government tries to directly deposit it into an account that has been closed, they will issue you a check instead.
The CARES Act offers certain provisions regarding retirement accounts for those affected by COVID-19. To qualify, you, your spouse, or a dependent would need to be diagnosed with COVID-19. People who have experienced lost wages to due to being quarantined, laid off, furloughed, or having their work hours reduced are also eligible.
- Hardship withdrawals: Eligible people may withdraw up to $100,000 from their retirement accounts, total, without penalty as long as they pay back the money within three years. The act also doubles the loan limits to the lesser of $100,000 or 100% of the vested account balance. Important note: While the 10% penalty for early withdrawals are waived, you will still owe taxes on the withdrawals.
- 401(k) loans: The act allows retirement plans to adopt policies allowing loans on the retirement accounts immediately.
- Required minimum distributions waived for 2020: Retirees who turned 70 ½ last year would have had to take their first required minimum distribution from retirement accounts this April 1. They would have had to base that amount on the balance in the accounts as of Dec. 31, 2019, when the market was much higher than it is currently. This will help retirees await for a possible market rebound before having to withdraw from their accounts.
Special note: Before tapping into your retirement account or other investments, you should consult with your financial adviser and tax professional about how doing so may affect you financially.
Temporary student loan relief
Those holding government-backed student loans can get the following relief through Sept. 30, 2020:
- No federal student loan payments. This applies to loans owned by government agencies. This does not apply to loans issued by financial institutions, FFEL Loans, or other non-federal student loans.
- Interest doesn’t accrue on federal student loans during this period.
- Garnishments of wages, Social Security, and tax refunds will be suspended through Sept. 30.
- Even if you pause payments, you’ll still get monthly payment credit toward any loan forgiveness or loan rehabilitation program.