If you're counting on your credit card to help get you through a tough financial spot amid the novel coronavirus outbreak, you might be out of luck.
Ted Rossman, an industry analyst with CreditCards.com , says some card companies are clamping down on new approvals or cutting credit limits with existing customers. He says it’s all about risk management.
He warns if you have credit cards you haven’t used in a long time, getting close to your limit, making payments late or have a falling credit score, your card limit could be lowered or canceled entirely.
To avoid this for unused cards, you might want to make a small purchase you can pay off right away.
If you have trouble paying a credit card, contact the company. Some companies are working with customers to skip payments with no fees or extra interest. You can also ask for a lower interest rate.
All this will protect your credit, which could prevent future cancelations.
Rossman also suggests asking the company about other programs.
“You can also use program like Amex Pay It Plan It or My Chase Plan or Citi Flex Plan,” Rossman said. “These [are] examples of basically installment loans.”
Rossman says you can often get lower interest rates and more predictability on how long you have to pay off a big purchase.
In terms of getting cash in a pinch, Rossman says standard credit card cash advances are one of the worst options because of interest rates.
Zero balance transfer cards, personal loans and home equity loans are better options, but they’re harder to get now. Borrowing against your 401k in this scenario is likely a better idea.
When borrowing from family and friends, CreditCards.com found about half the time, feelings get hurt or money gets lost.
The National Foundation for Credit Counseling also has good resources to help you get finances in control.