Should You Apply for a Credit Card During the COVID-19 Pandemic?
Now might seem like an odd time to be applying for a credit card. After all, no one really knows when things will get back to normal. Right now, tens of millions of people are out of work and the economy is shrinking. Even those who are employed must be feeling vulnerable to layoffs.
You might also think that creditors are pulling back on credit. No bank wants their borrowers to default on them, and this environment is encouraging borrowers to default. Even if you want a credit card, will a bank give you one?
The truth is that yes, many banks are continuing to issue credit cards, even during the pandemic. But whether you should actually sign up for one depends on a few factors, which our Plantation bankruptcy attorney looks at below.
Identify Why You Want a Card
There are some valid reasons and some not-so-good ones. First, the valid: a credit card provides a safety net in the event you need to make purchases but don’t have the money. Ideally, of course, you would have an emergency fund built up especially for times like this. But if you haven’t managed to save any money, a credit card can still cover necessities.
Less compelling reasons for a card include wanting to go on a vacation when the pandemic ends or making purchases right now that you can’t afford. All you would be doing is running up debt, which you must eventually pay back.
Find a 0% APR Card
Some cards offer an 0% APR for a limited time, such as 12 or 15 months. As CNBC notes, it is vital that you pay off your balance before the end of the promotional period, otherwise you will begin accruing interest.
Also look for a credit card that does not charge an annual fee. There is no reason to pay a fee today.
Consider Other Strategies for Freeing Up Cash
Everybody has expenses today, and any drop in income can be very stressful to manage. However, there are some tried-and-true methods for freeing up money that won’t involve you going deeper into debt.
One great method is to use a credit card for a balance transfer. The card you get should have a lower interest rate than the other cards that currently carry balances. Many companies offer 0% balance transfers for up to 18 months and charge only a small fee (between 3-5%) to make the transfer. Once you move all balances to this card, you can often save hundreds of dollars a month thanks to the lower interest rate.
In a normal economic environment, you would ideally use this “extra” money to pay down the principal faster. However, during the pandemic, you might need this money for living expenses, such as food or utilities. When your finances return to normal, you can then start aggressively paying down your debt.
Contact Our Bankruptcy Attorneys in Plantation
Bankruptcy remains an attractive option for financially distressed consumers, but you should look closely at all your options. One key is to time your bankruptcy filing properly so that you can sweep away as much debt as possible.
To meet with one of our Plantation bankruptcy attorneys, please call 888-813-4737 to schedule a free case review.