Getting by on credit?

CONTRIBUTEDJim Ingham is a counselor with Consumer Credit Counseling Service of Buffalo, a non-profit organization that offers debt management counseling free of charge to residents of Erie and Niagara counties. During the COVID-19 crisis, counseling is by telephone.

The bills: water, gas, electric, phone, food, car insurance, mortgage payment, cable. They can't be put off and the unemployment compensation isn't coming in as quickly as it should. And then there are those credit cards.

Noelle Carter, president and CEO of the nonprofit Consumer Credit Counseling Service of Buffalo, knows credit card debt can mount quickly and often people need help managing it.

In March alone, she said, CCCS helped 250 people manage their credit through financial counseling. The agency, which has offices in Lockport and Niagara Falls, can also help debtors get their payments under control. 

"We have a lot of people who are on a debt management plan with us right now, because they did have credit card debt," Carter said. "We have an internal payment plan where we can work with creditors to get interest rates and minimum payments lowered and the client makes one payment to us."

Since the COVID-19-inspired shutdown of New York state began in mid March, more people are experiencing "financial hardship," Carter observed. "A lot of us use credit cards, sometimes, as that emergency savings account. They might be charging groceries and the necessities on them right now."

And as those credit card balances grow, spenders who have no income may have trouble making their monthly payments.

CCCS is advising those folks to reach out to their creditors as soon as possible.

"There's various different options and guidance that lenders have been given through the CARES Act or just through New York state, in general," Carter said. "Your lenders should try to be flexible with you, and they should provide options if you've been impacted financially by the COVID-19 pandemic."

One of the services that credit card companies may provide is suspension of monthly minimum payments. However, Carter said, that's not always as pain-free as it sounds.

"It's important that you fully understand what they're extending to you, what the terms are — and get it in writing," she said. "The ideal situation is that they're suspending those payments without any kind of negative credit reporting."

Payment history is the biggest factor in one's credit report, and by not making minimum payments on credit cards each month, Carter said, harm is being done to your credit report. By asking to essentially skip a payment, it's possible to avoid the damage and stall for time until some income is coming in and payments can resume, she said.

"It does depend on the lender, but that's definitely something we'd recommend, ironing out those types of details before you enter into an agreement, so you understand that once the suspension is over, what's going to be expected of you moving forward," Carter said. "Are your minimum payments going to jump back (to) 150% and are you still going to be in trouble after that point?"

"Due to the pandemic, lenders are being much more flexible than they may have been in the past," Carter said. "This isn't some small issue that's impacting just a little bit of our population. It's happening to everybody, so fortunately, unfortunately, we're not alone in this."

CCCS financial counseling is by phone only during the lockdown. For more information, go to www.consumercreditbuffalo.org.

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