5 debt management tips amid the coronavirus pandemic

Struggling to stay afloat during the pandemic? These strategies can help. (iStock)

Unemployment has surged since the start of the coronavirus pandemic. As of September, nearly 8% of all Americans were unemployed — up from less than 4% before the pandemic.

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Those job losses make it hard for many to stay afloat. And when you throw in the $14 trillion of consumer debt that households are dealing with, the battle gets even more challenging.

Are you struggling to manage your student loans, mortgage, credit cards or other debts due to the pandemic? Here are five steps you can take to lighten the load.

  1. Contact your lenders
  2. Refinance your debts
  3. Consider a balance transfer credit card
  4. Take out a debt consolidation loan
  5. Talk to a credit counselor 

1. Contact your lenders

Many lenders have assistance programs in place — especially during the pandemic. You may be able to get on a repayment plan and spread your payments out over time, or there may be a way to pause your payments temporarily.

In some cases, your lender may even let you modify the terms of your loan, which could mean a lower monthly payment. These options all vary by company, so get in touch directly with your lender to see what’s available.

2. Refinance your debts

Another option is to refinance your debts. Interest rates on both mortgage loans and student debt are at record lows right now, so refinancing into a new loan could mean a lower interest rate and a lower monthly payment. It could also save you money in the long run.

To make sure you get the lowest refinance rate possible, work on improving your credit score before applying. Asking for a credit line increase, reporting any errors on your credit report, and getting added as an authorized user on someone else’s credit card can all help. (If you go the latter route, just make sure they have a high credit score and a history of on-time payments).

You should also shop around for your loan. Interest rates differ by lender, so by getting multiple quotes, you give yourself the best shot at a low rate and affordable deal. If you're looking to refinance your mortgage, for example, consider using a tool like Credible to get multiple rate quotes at once from several lenders.

HOW TO REFINANCE YOUR MORTGAGE

Multi-lender marketplace Credible can also help you compare private student loan lenders at once to determine if now is the right time to refinance, based on your loan type, loan amount and more.

3. Consider a balance transfer credit card

Balance transfer cards can also be an option. These allow you to move the balances of other debts and loans onto the card, essentially consolidating them into one single monthly payment.

Many balance transfer cards offer low interest rates (or even rates of 0%) for a limited amount of time. If you’re able to pay your balance off before that period expires, then you’ll save yourself a ton on interest in the long haul.

Again, shopping around is key here, so make sure to use Credible to compare balance transfer cards and rates. This will help you get the best deal possible.

HOW TO GET A BALANCE TRANSFER CARD

4. Take out a debt consolidation loan

A similar option is called a debt consolidation loan. With this strategy, you’d use a new loan to pay off all your other debts, essentially rolling them all into one single loan. This makes repayment easier (only one payment per month) and can often mean a lower interest rate, too — especially if you’re dealing with high-interest credit card debt.

As with other loans, interest rates vary on debt consolidation loans, so be sure to compare at least a few different options. Credible can help here, too.

9 OF THE BEST DEBT CONSOLIDATION COMPANIES

5. Talk to a credit counselor

If you’re still struggling to keep your head above water financially, you might consider talking to a credit counselor. They can walk you through your options, offer debt assistance, help with budgeting, and advise you on other ways to improve your finances.

Just make sure the counselor you use is licensed and reputable (checking customer reviews and the Better Business Bureau can help). If you’re struggling to pay your mortgage, you can also consider speaking to a HUD housing counselor. These services are free of charge.

Keep in mind that if you have a federally-backed mortgage loan, you qualify for automatic forbearance for up to 360 days. Just contact your loan’s servicer to get started.

WHAT ARE STUDENT LOAN REFINANCING RATES?

You have options

If you’re facing financial hardship, there are several steps you can take to ease the burden. Talk to a counselor, consider refinancing or consolidating your debts, and make sure to shop around to get the best interest rates. Tools like Credible can help you find the best options for your situation and budget.

5 WAYS TO LOWER MONTHLY STUDENT LOAN PAYMENTS