Household Bill Pay by Credit Card Doubles Amid Coronavirus Outbreak
It’s been two months since COVID-19 was reported across all 50 states, and many Americans are now facing the reality of reduced income and job loss. Even though most states are starting to reopen, it could take months for businesses to become fully operational again.
How are Americans feeling about their finances? A new study reveals that 82% of American adults are worried or ‘very worried’ about making ends meet while the economy recovers. Moreover, 59% are unsure if they can cover their upcoming housing and utility bills.
Americans Prioritize Which Bills to Postpone
Over one-third of survey participants (36%) said that they plan to delay at least one bill for the upcoming month. When prioritizing which bills to delay, consumers appear to factor late payment fees into their decision making. Rent, auto loan payments, cable/internet and utilities were the bills most likely to be put on the back-burner. Health, dental and life insurance were the least likely bills to be delayed. If you are able to pay your utility bills in full and on time you could increase your credit score using Experian Boost.
Credit Cards Provide Temporary Relief during the Financial Crisis
According to doxoINSIGHTS, Americans pay an average of 15% of their household bills by credit card each month. In the heart of the COVID-19 pandemic, consumers are now projected to pay 33% of their bills via credit card. Thankfully, 40% of Americans have a plan to manage their debt by paying minimal installments until their income improves. For those who were already carrying a balance on their card, they plan to slightly reduce their monthly payments for the time being. Depending on your credit score you may be able to get a credit card with a 0% intro offer that would allow you to make purchases without interest charges for a certain length of time. Typically these cards require good or excellent credit.
With this in mind, many credit card issuers are starting to reduce credit limits without warning. If you plan to rely on credit cards for bill payments, verify your available balance before making a payment. If you need an increased limit to cover your costs, contact your card issuer to discuss your options.
How to Manage Bills during the Outbreak
If you’re struggling to make ends meet during this uncertain time, here are some financial tips to assist you:
- Reduce your expenses as much as possible. Cook your own meals, avoid unnecessary purchases, and cut back on non-essential subscription services.
- Negotiate a lower rate for monthly bills. You may be able to get a lower rate on your phone, cable, internet and other services simply by asking the right questions. Truebill is a budgeting tool that helps you monitor your finances, track your subscriptions and lower your bills with ease. Their negotiators can help you get a one-time bill credit or reduced monthly rate with little-to-no effort on your end.
- Be leery of debt accumulation. If you need to use your credit card to pay bills, do so. Just be aware of the amount of debt you’re accumulating and how quickly it needs to be repaid. If you can avoid debt by sacrificing other expenses, you’ll come out of quarantine with less stress on your shoulders.
- Pay something, even if you can’t pay it all. If you can only give your landlord $500 out of your $1,000 rent, that may be enough to avoid eviction. You will still owe the remaining balance, but the landlord will see that you’re making an effort. This works for nearly all bills, and it could be just enough to get you through the pandemic.
- Maintain a strict monthly budget. Having a budget matters now more than ever. You may soon see that you don’t have as much free spending money as you used to have. Adjust your habits to accommodate your current income, and then you can re-adjust your budget once your finances improve. Learn how to set a budget.