COVID-19 Financial Fears Subsiding? Forbearance Re-Enrollment Numbers May Suggest So

COVID-19 Financial Fears Subsiding? Forbearance Re-Enrollment Numbers May Suggest So

June 12, 2020         Written By Heaven Speirs

When the COVID-19 outbreak first began, most of the credit card companies in America issued forbearance programs to help their customers. The programs included temporary credit line increases, waived interest, skip-a-payment options, and more. Many cardholders feared what these options may mean for their long-term finances, but things are already taking a positive turn.

According to Discover CEO Roger Hochschild, 80% of cardholders who enrolled in the skip-a-payment program resumed normal card payments after one month. “The re-enrollment rate is relatively low,” he says. Americans appear to be on the road to recovery, bringing hope to a potential financial crisis.

Why Forbearance Re-Enrollment Is Low

The forbearance offers were issued before the $1,200 economic impact payment was approved. It stands to reason that many Americans used their stimulus check to cover bills after forbearance. With that said, it’s also possible that the financial damage from COVID-19 was not as significant as originally anticipated. Consumers accepted forbearance without knowing what the future held, only to find themselves in a stable place shortly after. Whatever the cause may be, the limited re-enrollment in forbearance could be a positive sign for what’s to come.

How to Stay on Top of Your Finances after Forbearance

If you opted to accept your lender’s forbearance offer, here are some tips to maintain your finances in the aftermath:

  • Set a modest budget based on a reduced income level, even if your income has returned to normal. The long-term financial impact of COVID-19 still remains unknown, so it’s best to prepare for the worst-case scenario. If your income stays high, you can enjoy a higher savings in the end. If not, you have emergency funds available to avoid additional forbearance.
  • Learn from past money mistakes. If the pandemic left you in a financial bind, take steps to avoid the same issue moving forward. Avoid unnecessary purchases. Be diligent with your savings, and keep your debts to a minimum.
  • Negotiate a lower rate for your phone, cable or internet bill. The negotiators at Truebill can help you get a one-time bill credit or reduced monthly rate just by asking the right questions.
  • Continue using your stimulus payment wisely. Save this money for essential purchases or emergency funding. If an additional stimulus payment is granted, put that money away for when you need it most.
  • Protect your credit score. Make your minimum payments on time, and keep up with the terms of your forbearance agreement. If you need additional time to repay your debts, talk to your credit card provider about your options. Communication is crucial for protecting your credit during a financial struggle.
  • Stay motivated! This is a trying time for everyone. Know you are not alone. If you remain diligent about money management and credit maintenance, you’ll be just fine.

Check out our Consumer Tips for more information about how to manage money, build credit, and pay off debts fast.

The information contained within this article was accurate as of June 12, 2020. For up-to-date information on any of the terms, cards or offers mentioned above, visit the issuer's website. Many of the offers on this article are from our affiliate partners, and LowCards.com may be compensated if you take action with any of our affiliate partners.

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heaven

About Heaven Speirs

Heaven Speirs is a contributing writer for LowCards.com. She remains up-to-date with the latest developments in the credit card industry and the financial sector as a whole. Heaven has over 10 years of experience in online journalism, the bulk of which has been focused on personal finance. Heaven attended Oklahoma State University, where she discovered her talent for research and content creation. In her spare time, Heaven enjoys painting, playing poker, and spending time with her husband and three dogs.