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Here's how to manage your credit card payment during the coronavirus pandemic

If you're not sure how to pay your credit card bills during the coronavirus, Select offers questions to ask and actions to take to manage payments during this uncertain time.

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In the wake of the coronavirus pandemic, most major credit card issuers are waiving payments, fees and interest for cardholders who are suddenly struggling to make ends meet.

While these assistance programs serve as essential aid in this critical time, they are temporary measures that require special enrollment on a provisional basis — not a long-term financial plan. Most experts encourage consumers to continue making payments on their credit card, student loan, mortgage and other bills if they can afford it. Otherwise, you could be trading short-term relief for long-term costs.

If you're one of many consumers who could benefit from skipping your monthly credit card bill, but you're not sure exactly what to do, you should ask yourself a few questions to guide your decision.

Below, Select outlines what to consider first, as well as some actions you can take, to manage credit card payments during this hectic time.

1. Review your financial standing

If you're having trouble paying credit card bills and trying to decide what to do, Erin Lowry, author of "Broke Millennial Takes On Investing," advises consumers to know exactly how much money they need to hit the bare minimum on all their financial obligations each month, including housing, food, utilities, transportation, medicine and debt payments.

"This includes making the minimum payment on your credit cards," Lowry says. "Of course, it's always ideal to pay more, but right now there's a lot of uncertainty, and it might not make sense for you to put more than the minimum toward your credit cards when you need to be conserving your available cash."

Many credit card issuers are offering temporary assistance programs to eligible cardholders who are facing financial hardships, such as limited income as the result of a recent layoff, furlough or reduction in work hours. Through these programs, you may be able to receive credit card forbearance, which allows you to temporarily pause payments with no late fees or reduced interest charges.

2. Consider the pros and cons of forbearance

While credit card forbearance programs can provide temporary relief from bill payments, you should weigh the pros and cons before signing up. For starters, you have to opt-in to a forbearance program or any coronavirus-related assistance.

"Don't assume it just gets applied to your account. You need to actually call or chat online or submit your request digitally prior to a missed payment," Lowry explains. If you skip payments without first speaking to your card issuer, your credit score will likely decrease and you could be hit with late fees up to $40.

Many credit card forbearance programs offer short-term relief by temporarily letting cardholders pause their payments, but you'll typically still accrue interest charges during the forbearance period. And if you have a high APR, the interest charges can add up over time, making it even more expensive to pay down your debt.

If you have good credit or excellent credit, a better option might be to transfer your debt to a balance transfer credit card with no interest for an introductory period. The Citi Simplicity® Card offers 0% intro APR for 21 months on balance transfers from date of first transfer (after, 18.99% - 29.74% variable APR; balance transfers must be completed within 4 months of account opening). There is an introductory balance transfer fee of 3% or $5, whichever is greater for transfers completed within the first 4 months of account opening. After that, your fee will be 5% of each transfer (minimum $5).

If you have less-than-stellar credit, and forbearance is the best available option, only use it as needed. Once you're able to resume payments, make a plan to tackle your debt so you don't have to continue paying high interest charges.

3. Factor in any emergency savings

Experts generally recommend you have emergency savings of three to six months worth of expenses. For instance, if you have $3,000 in expenses each month, you should have between $9,000 to $18,000 saved.

If you've lost your job and are having trouble paying bills, you can tap into that emergency savings to help cover essential expenses. The key here is essential expenses — that means groceries and utility bills, not new clothes or TVs. You'll want to limit non-essential purchases and save as much money as possible to avoid taking on unnecessary debt.

While you can use your emergency savings to make at least the minimum payments on your credit card bills, Lowry warns: "Don't start draining your emergency fund to aggressively pay off your debt right now."

"We simply don't know how long this will all last, so it's best to have a preservation mindset about your emergency fund right now," Lowry says.

Learn more: Making only minimum payments on credit card debt could cost you thousands and take over a decade to repay

4. Budget your money accordingly

Before you use any extra funds to pay off credit card bills, keep in mind how long you need your cash to last. With experts predicting the country will be shut down for the coming months, you should make a plan for how to spend your emergency savings accordingly.

If you still have an income, try to save as much as possible. So if you bring in $4,000 a month, and your monthly expenses are $3,000, save the remaining $1,000. This can provide a safety net if your income decreases or unexpected expenses arise.

5. Consider 0% APR cards

If you're looking to finance upcoming purchases, whether that's groceries or car payments, consider putting them on a 0% APR credit card. These cards offer no interest for over a year and can provide a long-term interest-free period.

Lowry points out that you should make note of when the 0% APR offer expires and know what your post-promotional interest rate is going to be. This way, you'll know when you should have your balance paid off by in order to avoid interest charges that take affect when the intro period ends.

For instance, the American Express Cash Magnet® Card offers an intro 0% APR on purchases for 15 months from the date of account opening (then 18.24% to 29.24% variable). (See rates and fees.)

Even though you're using a 0% APR card, you should spend within your means to avoid falling into credit card debt. But overall, charging expenses to a no interest card is still better than accruing interest with credit card forbearance programs.

Keep in mind, you'll still need to make the minimum payment to keep your account current, though you may be able to call and get it waived through a forbearance program. And once you're in a more stable financial situation, you need a plan for paying off your credit card balance.

"Unless you have really good job security, this is not a time to focus on aggressive debt payoff," Lowry says. "Instead make sure that you're building up your emergency fund,"

Learn more: How to delay your credit card payment

Information about the American Express Cash Magnet® Card and Citi Simplicity® Card has been collected independently by Select and has not been reviewed or provided by the issuer of the card prior to publication.

For rates and fees of the American Express Cash Magnet® Card, click here.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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